The path to collecting Social Security benefits in retirement usually goes something like this. You work for at least 10 years (often more) and pay taxes on your wages. Then, once you turn 62, you're eligible to claim Social Security based on your personal earnings history.
But what if you never worked, or you didn't work long enough or earn enough to qualify for Social Security benefits in retirement? Thanks to spousal benefits, you may still be in line for a monthly check from Social Security once you're 62 or older.
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But if you'll be counting on spousal benefits to help fund your retirement, it's important to know how they work. Let's review four things every retired couple needs to know about Social Security's spousal benefits,
1. You can claim spousal benefits even if you're no longer married
The words "spousal benefits" seem to imply that you need to be somebody's current spouse to claim Social Security on their earnings record. But that's not true. If you're divorced, you may be eligible for spousal benefits from Social Security if you were married to your ex-spouse for at least 10 years and you haven't remarried.
2. If you're married, you can't get spousal benefits until your spouse files for Social Security
If you're divorced and entitled to spousal benefits based on your ex-spouse's earnings record, they don't get a say in whether you're able to collect those benefits. And you don't even have to wait for your former spouse to sign up for Social Security to collect spousal benefits yourself.
The rules are different if you're married, though. In case, you can't start collecting spousal benefits until your spouse starts receiving monthly benefits from Social Security themself.
3. Spousal benefits have a maximum value
If you're wondering whether the amount you're eligible for in spousal benefits is the equivalent of your spouse's monthly Social Security check, here's some bad news -- it's not. In fact, your spousal benefit will max out at 50% of what your spouse is entitled to at their full retirement age.
This also means that there's no sense in you delaying a spousal benefit claim based your full retirement age. Waiting won't result in larger payments like it would if you were claiming Social Security on your own earnings record.
Here's an example. Let's say you're the recipient of spousal benefits, and your spouse is entitled to a $2,400 monthly Social Security check at their full retirement age.
At your full retirement age, you can receive $1,200. If you file for spousal benefits early (which you can do as early as age 62), your $1,200 check will be reduced. If you delay your spousal benefit claim a year past full retirement age, it will still only be worth $1,200 -- so don't do that.
4. Your benefits can increase when they become survivor benefits
While spousal benefits from Social Security max out at 50% of your spouse's check at full retirement age, that only applies when your spouse is alive. If you outlive your spouse, your spousal benefits will convert to survivor benefits. And at that point, you'll be eligible for 100% of whatever your spouse was collecting from Social Security.
Generally, spousal benefits convert to survivor benefits automatically once the Social Security Administration (SSA) is notified of the death. However, if you're not yet receiving spousal benefits, or you're collecting Social Security benefits based on your own earnings record, you may need to reach out to the SSA and apply for survivor benefits.
Social Security spousal benefits could end up playing an important role in your household's finances during retirement. So it's important to understand the ins and outs of how they work. It's also important to talk about Social Security filing strategies with your spouse so that collectively, you can make the most of that ongoing income stream.
