In the first part of our Social Security blog series, we discussed the basics of retirement benefits. It’s equally important to understand what benefits are available for spouses. A spouse does not need a working record of their own to qualify. However, the rules surrounding these benefits are confusing, so let’s walk through it.
There are three requirements to be eligible for spousal benefits:
1. You must be married to someone who is currently receiving Social Security retirement benefits.
2. You must have been married to this person for at least one year.
3. You must be at least 62 years old.
Spousal benefits are capped at 50% of the amount your spouse receives from Social Security. If you worked and qualify for benefits on your own, you may still be eligible for spousal benefits. Social Security will always pay you the highest benefit available.
Using an example, let’s say you qualify for a $300/month benefit based on your own working record. Your spouse is currently collecting $1,000 each month from Social Security. Fifty percent of your spouse’s benefit is $500, which is greater than your own benefit. Thus, Social Security will pay your $300 retirement benefit plus a $200 spousal benefit, which equals the full $500 amount.
You must wait until your own Full Retirement Age (FRA) to receive this maximum amount. Spousal benefits may begin as early as age 62, but like retirement benefits, filing early will result in a permanent reduction. If you file at age 62, your spousal benefit would be reduced from 50% to approximately 35%. For every year between 62 and FRA, the gap narrows by 4-5%.
If your spouse waited beyond FRA to increase his own benefit, your spousal benefit is still capped at 50% of his Full Retirement Age amount. However, if your spouse filed early for a reduced benefit, you’ll only get up to 50% of that reduced amount. Again, these benefit reductions are very confusing so it’s important to make these decisions very carefully.
A final point on spousal benefits pertains to people who are divorced. You are still eligible for spousal benefits but the requirements are slightly different. You must have been married for at least 10 years and your ex-spouse must be at least 62 years old. One big difference is your ex-spouse does not have to be receiving benefits, but you must have been divorced for at least 2 years and have not remarried before your benefits can begin.
On a side note, there is an additional option for spousal benefits known as the Restricted Spousal Application for those who are eligible. We will cover this strategy in an upcoming post. In our next post, I’ll discuss benefits for other family members and survivors.
Understanding how spousal benefits work and the timing plays a big part in the benefit you’ll ultimately receive. Here are a few important points to sum up Social Security spousal benefits:
- You must meet all three requirements listed above to be eligible.
- The most you can receive is 50% of your spouse’s retirement benefit so there is no incentive to wait beyond your own Full Retirement Age (FRA) to start receiving spousal benefits.
- Filing early will result in a permanent reduction to your spousal benefits.
- Divorcees are still eligible for spousal benefits if certain requirements are met.
If you have questions regarding your own Social Security benefits, please feel free to contact us today.