Generally, Social Security benefits are earned by working and paying taxes on wages for a long enough period to accrue 40 credits toward the program. But it's possible to collect Social Security without working a day in your life.
If you're either married to someone who's eligible for Social Security or divorced from someone who's entitled to benefits (and you meet certain requirements), you may be able to collect spousal benefits from the program. And those benefits are pretty generous, totaling up to 50% of what your current or former spouse is able to receive.
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But if you're going to claim spousal benefits from Social Security, it's important to know the rules. And there's one mistake you definitely don't want to make in the course of signing up.
Don't delay your filing too long
It pays to wait until you reach full retirement age (FRA) to sign up for spousal benefits from Social Security. If you were born in 1960 or later, FRA will kick in at age 67. By filing at that point, you'll be eligible for 50% of your spouse or ex-spouse's benefit.
However, you don't want to delay your spousal benefit claim beyond FRA. The reason? You get no financial upside in return.
When you're signing up for Social Security benefits based on your own earnings record, there's a big advantage to delaying your filing past FRA. For each year you hold off up until age 70, your benefits will grow by 8%. And that boost is permanent.
But that rule doesn't apply to spousal benefits. The most you can get from a spousal benefit claim is 50% of the amount your current or former spouse is eligible for. And delaying your filing will only result in you having to wait longer to get your money.
You're allowed to claim Social Security prior to FRA when you're filing based on your own work record, and you're also allowed to sign up for spousal benefits early. You can file once you reach age 62.
But in that case, your spousal benefit will be reduced permanently. And since the most you can get is half of what your spouse collects, you may want to wait until FRA to ensure that you get your maximum payout.
Know the rules
There are many, many rules associated with Social Security. And the more of them you know, the easier it's apt to be to make the most of your benefits.
Whether you're planning to claim a spousal benefit or a benefit based on your own wage history, take the time to read up on Social Security. Also, if you're filing for benefits based on your own earnings record, run the numbers on a few different strategies to see if it pays to claim Social Security on time or hold off. A lifelong boost could end up coming in very handy during retirement.
