Millions of workers expect to enjoy Social Security benefits after they retire. Yet Social Security also provides benefits to the spouses of many of those workers, and for millions of families, Social Security spousal benefits make a substantial impact to their overall income in retirement. Moreover, several aspects of how Social Security spousal benefits work can seem shocking to those who are unfamiliar with the program. Let's take a look at five aspects of Social Security spousal benefits that many people find surprising.
1. You don't need to have worked to get spousal benefits.
To qualify for Social Security on your own work history, you generally need to have accumulated at least 40 Social Security credits, which takes a minimum of 10 years of work. Yet there's no work requirement to receive Social Security spousal benefits based on your spouse's work history.
Social Security's history goes back to a time when one-worker families were much more common than they are today, and some believe that spousal benefits have become obsolete. Nevertheless, for those who choose a single-earner lifestyle, Social Security spousal benefits provide a huge boost to their financial well-being in retirement.
2. Spousal benefits aren't affected by when the primary worker takes benefits.
As we've said before, the decision that a worker makes on when to take Social Security can have a big impact on the entire family's benefits. Specifically, survivor benefits that a spouse, child, or other eligible beneficiary receives after the worker's death are based in part on the worker's own benefits. As a result, if a worker took reduced benefits between age 62 and full retirement age, the survivor benefits associated with that work record will also be reduced.
For spousal benefits, though, the amount is based on the full primary insurance amount for the worker, even if the worker didn't take benefits exactly at full retirement age. Then, the spouse's age gets taken into consideration, with early claiming spouses taking a haircut on their monthly benefit check in a similar way to a worker's benefits.
3. There's no bonus for deferring spousal benefits past full retirement age.
Many Social Security strategies for workers hinge on the ability to get delayed retirement credits for claiming benefits after full retirement age. For those retiring now, waiting until age 70 to start taking Social Security can result in monthly checks that are 32% larger than you'd get at age 66.
For spousal benefits, though, there are no delayed retirement credits available. Therefore, it doesn't pay to wait until age 70 before taking spousal benefits. Once you reach full retirement age, which is currently age 66, there's no reason to keep waiting -- go ahead and claim your spousal benefits rather than simply losing them.
4. Spouses who earn pensions from government jobs can lose their Social Security.
If you earn a pension from a private job, then it has no impact on your Social Security spousal benefits. But if you worked for a government employer, the Government Pension Offset can take away your Social Security payments, sometimes leaving you with no benefits from Social Security at all.
In general, the Government Pension offset reduces whatever Social Security payment you're entitled to receive by two-thirds of the amount of your government pension payment. So if you would ordinarily get a $500 Social Security payment and your government pension is $600 per month, then the reduction would be two-thirds of $600, or $400, leaving you with a $100 Social Security benefit. If your government pension were $750 or higher, then you'd be left with no Social Security at all. Some argue that this is reasonable because many government workers with pensions never pay taxes into the Social Security system, but others point to the unfairness of treating public and private workers differently.
5. Many ex-spouses are eligible for spousal benefits, even if the primary worker has remarried.
Divorced spouses often worry that they're out of luck when it comes to Social Security, but spousal benefits are often available to ex-spouses. If you were married for 10 years or more and you haven't remarried, then you can typically claim the same spousal benefits you'd get if you were still married.
Surprisingly, it doesn't matter whether your ex-spouse remarried or how many people are entitled to spousal benefits on the ex-spouse's work record. As long as you meet the guidelines, then those spousal benefits are yours.
Benefits from Social Security are a key source of income not just for workers but for their spouses as well. By maximizing your Social Security spousal benefits, you can make a big difference in how much your family is able to get to support your financial needs in retirement.
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