Source: Social Security Administration.
Social Security's origins hark back to a time when many families had a single wage-earner, and the rules covering spousal benefits still largely reflect that family structure. As with any set of rules, though, those who don't neatly fit into the family dynamics that Social Security initially envisioned can find themselves in unusual situations. While some people end up with the short end of the Social Security stick, one group of people that can make out like bandits under Social Security are those who wait until retirement age to marry. In some cases, getting married can quickly lead to a big boost in Social Security payments to the newlyweds -- giving them a more valuable wedding present than they're likely to find anywhere else.
The way spousal benefits work
The initial concept of spousal benefits makes plenty of sense in the context of a single-earner family. When many couples had only one person working, providing for at least minimal benefits for the other spouse helped to ensure that the couple would have enough financial resources to make ends meet for the entire family. In essence, just as the non-working spouse effectively earned a share of the family wealth, Social Security recognized the non-working spouse's claim to at least a portion of the work efforts of the working spouse.
Source: Social Security Administration.
For couples who were married for decades, that policy argument still makes sense. Even as more couples involve having both spouses work, Social Security's spousal benefit rules give families the option to make decisions that have one spouse stay at home without jeopardizing their entire retirement.
Where the policy behind spousal benefits falls apart, though, is with those who marry late. The reason is simple: the short length of time you have to be married before you can claim Social Security benefits can actually entice older couples to marry for financial reasons.
You don't have to wait long for a second honeymoon
The Social Security Administration does have some rules limiting the ability of would-be recipients to manipulate the spousal benefit provisions by getting married late in life. Couples have to be married for at least one year before either spouse can claim spousal benefits based on the other's work history. The only exception to that rule is if both spouses have a child who's younger than age 18, in which case benefits are immediately payable.
Source: Social Security Administration.
In the context of a career lasting decades, a single year is an insignificant amount of time for a new spouse to wait to collect benefits based on a work history for which the spouse wasn't even present. In effect, spousal benefits are a windfall based on little other than outdated policy.
In response, some have called for reform of the spousal benefit provisions of Social Security. The Urban Institute, for instance, has argued that spousal benefits create unintended incentives both for marriage and divorce, and the fact that it also bases spousal benefits not on need, but rather on the working spouse's income level leads to distributional unfairness. It believes that cutting spousal benefits while boosting benefits payable to surviving spouses once the other member of the couple passes away would do more to prevent financial distress for survivors while reducing the ability for couples to manipulate benefit amounts during their lifetimes.
Yet any change to the rules only produces incentives in other directions. If you take away extra benefits for couples who marry, then in many cases, you'll encourage married couples to consider divorcing to maximize total Social Security amounts. Finding a reasonable middle ground is much more difficult than you'd think.
With Social Security reform likely years away at best, older newlyweds can expect the favorable provisions covering spousal benefits to stick around for quite a while. Keeping those benefits in mind can be a valuable wedding present that keeps paying for years and years into the future.
