Most people qualify for Social Security benefits in retirement by working and paying into the system for a good number of years. But there's another path toward Social Security if you never worked, or if you didn't earn enough to qualify for benefits yourself: spousal benefits.
Social Security's spousal benefits can be a financial lifeline for many people later in life. But it's important to understand the nuances of claiming those benefits. Here are three rules you should know about.
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1. You may have to wait until your spouse signs up to claim benefits yourself
If you're divorced, you may still be entitled to spousal benefits from Social Security based on your ex-spouse's record. And in that case, you don't need to wait for your former spouse to file for Social Security to get your spousal benefits.
If you're married, the rules are different. In that case, you cannot sign up for spousal benefits until your spouse claims Social Security. So it's important to have a discussion about your spouse's timing so you know when spousal benefits may be on the table for you.
2. You'll be penalized for filing early, but you won't be rewarded for filing late
The earliest age to sign up for Social Security benefits is 62. This holds true whether you're claiming retirement benefits based on your own earnings record or spousal benefits.
If you claim spousal benefits before reaching full retirement age (which is 67 if you were born in 1960 or later), those monthly checks will be reduced. If you don't like the sound of that, you shouldn't claim spousal benefits early.
However, there's also no reason to claim your spousal benefits late -- meaning, beyond your full retirement age. Delaying Social Security past full retirement age boosts your monthly payments when you're claiming benefits based on your own earnings record. But you can't grow a spousal benefit, so there's no sense in waiting past full retirement age if you're able to file at that time.
Social Security spousal benefits max out at 50% of what your spouse is eligible for at their full retirement age. If that number is $2,000, your maximum spousal benefit at your full retirement age is $1,000. You can't grow that $1,000 benefit by delaying your claim.
3. You can't double-dip
It's possible to qualify for Social Security spousal benefits plus benefits of your own. But one thing you can't do is collect both at the same time.
Social Security will pay you the greater of your own benefit based on your earnings record or a spousal benefit, though. So let's say you're eligible for $1,200 a month in Social Security based on your own wage history, or $1,000 in spousal benefits. In that case, you'll get the $1,200 a month -- but only that $1,200.
Spousal benefits from Social Security may end up being a pretty significant income stream for you later in life. It's important to understand the rules of claiming spousal benefits so you're able to make the most of them and budget accordingly for your senior years.
