Millions of retirees rely on their Social Security checks to help them meet financial obligations in their golden years, so it's important for all recipients -- both current and future -- to have a firm understanding of how the program works.
One topic for married couples concerns the rules that govern spousal benefit, which are paid to a worker's spouse if that spouse otherwise couldn't qualify for benefits based on his or her own work history.
Am I eligible?
To be eligible to receive Social Security spousal benefits, the working partner must be qualified to receive benefits based on his or her earnings record. The Social Security Administration determines eligibility through the use of its credit system, as workers need to earn at least 40 credits during their working years to receive retirement benefits. Earning a credit is relatively easy, as the the SSA gives you one credit for every $1,260 you make and pay Social Security taxes on. You can earn a maximum of four Social Security credits each year so it typically takes 10 years to qualify.
Once one member of the couple has qualified for retirement benefits, the spouse also becomes eligible. The spousal benefit can be taken as early as age 62 as long as the spouse with the working credits is also receiving retirement or disability benefits.
How much will I get?
Just as with other Social Security benefits, the earlier you tap your benefits the lower your payments will be. While you might be eligible to receive benefits early as 62, doing so will permanently reduce your payout. A spouse who chooses to file at the earliest possible time might receive only 35% of the working spouse's benefit, where if the spouse had waited until the current full retirement age of 66, he or she would have received up to 50%. When the full retirement age is raised to age 67, spouses who take benefits early will get hit even harder as the benefit will drop to only 32.5%.
The formula for calculating your benefit depends on a number of factors, so if you want to get a firm idea of what your payout will be, I'd suggest playing around with the SSA's calculator.
Maximizing your payout
One of the easiest ways to boost your benefit check is to simply wait to claim benefits until you reach full retirement age. Then you'll typically be entitled to a check that's roughly half of your spouse's full benefit amount.
Note that spousal benefits do not earn delayed retirement credits, so there's no benefit to waiting until after full retirement age to start your claim. It's almost always the right move to start your payments as soon as you reach full retirement age.
What if the spouse also qualifies under his or her own work history?
If a spouse has earned enough working credits to qualify for benefits on his or her own, the SSA will pay your benefit based on that person's own working record first. If it turns out that the spousal benefit is higher than your own benefit, the SSA will also add the difference to your check as a spousal benefit, so you shouldn't worry about being short-changed.
What happens if your spouse dies?
Strictly speaking, spousal benefits are paid only while the working spouse is still alive. Don't let that worry you, though, as once the spouse with the working history dies, you'll be entitled to receive survivors benefits, which are calculated a little bit differently.
As a general rule, survivors at full retirement age will receive 100% of the spouse's benefits, but that amount is adjusted based on when the spouse with the working credits started taking benefits. Again, taking benefits early reduces the amount of the benefit.
There is a potential complication here to consider: If your spouse dies and you remarry before age 60, you could lose the right to survivors benefits. You can still collect benefits if you remarry after 60.
What about divorce?
The way Social Security treats divorced couples is quite similar to how it handles couples that are still together, with one important exception. To qualify for benefits on your ex-spouse's work history, you must been married for 10 years or more and cannot have remarried. It doesn't matter if the ex-spouse with the working history gets remarried.
Divorced spouses can also qualify to receive survivors benefits, assuming the marriage lasted at least 10 years and they didn't get remarried before age 60 (or age 50 if they are disabled).
Figuring out how much you will receive in spousal benefits can be a bit complicated, so make sure you play around with the SSA's calculator to help you figure out what your benefit will be. If you need more help, it can be a smart idea to call or visit your local Social Security office to get your questions answered.