Although millions of seniors today receive monthly benefits from Social Security, those payments aren't a given. Generally, in order to receive Social Security, you have to work and pay taxes into the program.
But Social Security also takes care of the spouses of its recipients. So even if you never worked a day in your life, you may still be eligible for Social Security spousal benefits based on a current or former spouse's record.
Image source: Getty Images.
Since Social Security may end up being a pretty substantial portion of your retirement income, it's important to know what to expect from your spousal benefits. Here's the formula you can use to determine what monthly benefit you may be looking at.
It could be a pretty nice payday
In a nutshell, Social Security spousal benefits max out at 50% of what your current or former spouse is eligible to receive on a monthly basis at full retirement age (FRA). And to claim your full Social Security spousal benefit, you must wait until your FRA arrives.
You're allowed to claim spousal benefits from Social Security beginning at age 62, which is also the earliest age to sign up for benefits based on your own earnings record. Filing before FRA will reduce your spousal benefits, though you should know that postponing your claim beyond FRA will not increase your spousal benefits. Delayed retirement credits only apply to a Social Security benefit you're eligible for based on your own work record.
With that in mind, if you want to know how much money in spousal benefits Social Security might pay you, the best thing to do is have your spouse access their latest earnings statement on SSA.gov. That statement should contain an estimate of their monthly benefit at FRA. From there, you can divide that number in half and come up with an estimate of the spousal benefit you might get.
Consider other sources of retirement income, too
Social Security might end up paying you a decent chunk of money each month, even if you never paid into the program yourself. But remember, if it's just your spouse who worked, Social Security will, in a best-case scenario, replace about 40% of their pre-retirement wages, assuming the program manages to avoid benefit cuts.
Now if you're also entitled to spousal benefits, you may be looking at replacing more like 60% of your household's previous income. But still, that may not be enough income for a comfortable retirement. Many seniors end up needing more like 80% of their former income to achieve that goal. So if it's just your spouse who's working, a good bet is to budget carefully together so they're able to contribute some amount of money to a retirement plan consistently.
You may also want to consider some type of part-time work once your spouse is retired and you're both able to start collecting Social Security. You're allowed to earn money from a job and receive benefits simultaneously. However, if you do so before reaching FRA, you'll need to be mindful of Social Security's earnings-test limits, which change from year to year. Exceeding those limits could result in withheld benefits.
All told, it's important to have a solid handle on how much Social Security income to expect in retirement. This holds true whether you're getting a payday based on your own income history or are in line for a monthly check in spousal benefit form. And if you're not happy with that number, know that boosting savings contributions and working even a bit during retirement could change your financial picture for the better.
