Social Security is a program that can be full of surprises. For example, did you know that if you claim benefits early and regret your decision, you can undo your filing as long as you're within 12 months of it and meet other conditions?
Some Social Security rules apply to couples specifically. Here are three you need to know about.
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1. Your spousal benefit has a maximum value
Another neat aspect of Social Security is that you don't necessarily need to have an earnings history yourself to qualify for benefits. Usually, you earn Social Security benefits by accumulating 40 work credits in your lifetime. But if you were a stay-at-home parent or caregiver, for example, and never worked, you're not necessarily out of luck once retirement arrives.
If you're married to someone who's eligible for Social Security, you may be eligible for the program's spousal benefits. But it's important that both you and your spouse understand how to factor those benefits into your retirement income.
If you're eligible for spousal benefits from Social Security, they max out at 50% of your spouse's benefit at their full retirement age. So let's say you're married to George, who's eligible for $2,000 a month in Social Security at their full retirement age.
In that case, your maximum spousal benefit is $1,000 a month. And you're eligible for that $1,000 spousal benefit at your full retirement age, which may or may not be exactly the same as your spouse's, depending on the year you were each born in.
If you claim your spousal benefits early (you can do so starting at 62), they'll be reduced. But you can't grow your spousal benefits beyond $1,000 a month in this situation.
Now here's where things get tricky. Since George is claiming Social Security on their earnings record, George can accrue delayed retirement credits for holding off on benefits beyond full retirement age, up until age 70. But while George can lock in boosted benefits, you're maxed out at $1,000 a month based on how spousal benefits work.
2. You can't claim a spousal benefit until your spouse signs up for Social Security
George may be looking to delay Social Security past full retirement age for larger monthly checks. That could boost your household income and take some of the pressure off your retirement savings.
But you should know that you can't sign up for spousal benefits from Social Security until George files for benefits. That's how it works for married folks.
For divorcees, the rules are different. Divorced seniors claiming spousal benefits don't necessarily have to wait for their ex-spouses to take benefits for them to get spousal benefits.
So if your spouse is looking to delay Social Security, you'll need to understand that you may have to delay your spousal benefit claim. That's something to discuss together.
3. Spousal benefits convert to survivor benefits if your spouse passes away
You're entitled to spousal benefits from Social Security for as long as your spouse is alive. Once they pass away, Social Security typically converts those spousal benefits to survivor benefits once they learn of the death.
But whereas spousal benefits are worth only 50% of your spouse's benefit at full retirement age, survivor benefits are worth 100% of the amount your spouse was receiving when they passed. So in this example, if George locked in a $2,000 monthly benefit from Social Security, that's the benefit you'd get once George passes away. Your $1,000 spousal benefit would get bumped up to a $2,000 survivor benefit.
Social Security's rules can be a bit confusing for married couples. But it's important that you understand how both spousal and survivor benefits work so that your financial planning makes sense for you.
