Deciding when to claim Social Security benefits is often complicated since you can start your checks any time between 62 and 70, and the decision impacts both lifetime and monthly benefits. The choice becomes even more complex if you're married because it's possible one spouse may want to claim spousal benefits instead of retirement benefits.
Spousal benefits are calculated based on a spouse's work history instead of the claimant's work record. If you were a lower earner, you might benefit from getting benefits based on your spouse's salary record. However, there are a lot of rules that affect how much money spousal benefits can provide and when you are eligible for them.
As a result, married couples should make sure they understand the details about how spousal benefits work before either partner makes a benefits claim. In particular, there are three big facts that married couples must know.
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1. You can't claim spousal benefits until your spouse gets their retirement benefits
One of the first and most important things that married couples must be aware of is that it's not possible to claim spousal benefits until the spouse whose record the benefits are being claimed under has filed for their retirement benefits to begin.
Say, for example, you were a stay-at-home wife, and your husband earned a lot more than you, so you want to claim spousal benefits. You would have to wait until your husband claimed his retirement checks. This is the case no matter how old you are. So, if you turned 66 and your husband was 69, and you wanted to claim spousal benefits, but he was holding off on getting his retirement checks until 70, you would have to wait another year.
It doesn't matter if your spouse has actually retired yet -- your husband could still work, and you could collect your spousal benefits -- but he must have started his Social Security payments, or you can't start yours.
Now, a lower earner can file for their own benefits, based on their own work record, as soon as they turn 62. So, if you had worked and earned enough to qualify for your own payment, you could file and accept the benefits you personally earned. Then, when your spouse does claim retirement checks, you can switch over to spousal benefits at that point.
Many couples use this strategy to start getting some Social Security money into the household while the higher-earning spouse delays benefits to increase the monthly income they'll eventually collect.
2. Spousal benefits cap out at 50% of the higher earner's benefit
It's also important to know how much spousal benefits are worth so lower earners can determine if they will be more or less than the amount they could get on their own work history.
Spousal benefits cap out at 50% of the higher earner's primary insurance amount (PIA). That's the standard benefit they would get at full retirement age. It's based on average earnings throughout the 35 highest-earning years of their career. So, if the higher-earning spouse had a $2,000 standard benefit, the most the lower earner could receive is $1,000.
If the higher-earning spouse waits beyond full retirement age to increase monthly benefits, they can end up with a larger check, but it won't affect spousal benefit payments. If you were a stay-at-home wife and your husband, who had a bigger salary, waited an extra year and brought his benefits to $2,160 by earning delayed retirement credits, your max spousal benefit would not increase to $1,080. It would still be $1,000.
3. You can't increase spousal benefits after a certain point
Finally, it's important to know that delayed retirement credits are not available for spousal benefits.
Spousal benefits can be reduced if the person claiming them files for benefits to begin before reaching their own full retirement age. But they won't increase as a result of waiting longer to claim after FRA. This means there is no benefit to the lower earner to waiting beyond FRA, and they should start getting payments then if they can.
By understanding these rules, married couples can make the best, most informed choices about when each spouse can claim benefits. By maxing out lifetime income through strategic claiming choices, hopefully, couples can set themselves up for more financial security as retirees.
