If you're married and either you or your spouse earns significantly more than the other, you may find it beneficial for the lower-earning spouse to claim Social Security spousal benefits based on the higher-earning spouse's work record. Before you do, though, there are three critical facts to know about spousal benefits.
1. There are eligibility requirements
To be eligible, you or your spouse must:
- Be legally married for at least one year
- Be at least 62 years old (or any age if caring for a child under 16 or disabled)
- Wait until the higher-earning spouse claims benefits before filing for spousal benefits
- Be divorced from someone you were married to for at least 10 years
It's possible to claim spousal benefits, even if you're no longer someone's spouse. If you were married to your ex for a decade or longer and not currently in another marriage, you're likely eligible.
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2. The amount that can be claimed depends on when the claim is made
For the sake of this illustration, imagine that you're the lower-earning spouse. While you can claim Social Security spousal benefits as early as 62 (as long as your significant other has already filed for benefits), claiming at 62 will reduce the amount of money you'll receive. For example, if your spouse receives $3,000 a month at full retirement age (FRA) and you make a claim at age 62, your monthly benefit would be $975, or 32.5% of the amount your spouse receives, instead of the standard 50%.
If you wait until full retirement age to make the claim, your monthly benefit would jump to $1,500, or 50% of the amount your spouse receives.
3. Working until 70 only increases the higher-earning spouse's benefits
Between FRA and age 70, the higher-earning spouse's benefits will increase by about 8% annually. That means if they hit FRA at 67 but wait to claim benefits until age 70, their benefits would increase by 24% (8% x 3 = 24%). Rather than receive $3,000, the amount would increase to $3,720.
Now imagine that your spouse decides to delay claiming Social Security until age 70. Here's what that will mean for you:
- Only your spouse's benefit will increase between ages 67 and 70. Your spousal benefit will remain at 50% of the amount your spouse would have received if they hadn't postponed past age 67.
- Because your spouse's benefits increase to $3,720 due to waiting, your household still would bring in more money a month. Whereas you would have received a total of $4,500 if your spouse had made the claim at FRA, waiting until age 70 means you'd receive monthly benefits of $5,220 (their $3,720 + your $1,500 = $5,220).
From the time you had to decide whether to draw a fish or a house in kindergarten through old age, there will always be decisions to make. The more you know about your options, the more confident about retirement you're likely to be.
