What’s one of the most generous benefits available to retirees? That’s easy. It’s Social Security spousal benefits! These benefits are some of the most important, too.
A recent Social Security report found that 2.3 million individuals received at least part of their benefit as a spouse of an entitled worker. Some of these spouses had benefits of their own, but received a higher benefit because the spousal benefit amount was greater than their own benefit.
In fact, some of these individuals have never worked outside the home or paid Social Security tax. They have no benefit of their own and rely exclusively on the Social Security spousal benefit available under their spouse’s work record.
What’s one thing that most all of them have in common? The Social Security income is a critical part of their retirement income.
Let’s take a look at what it takes to qualify as well as how much money you may receive as a spousal benefit.
What Does it Take to Qualify?
Unlike most rules related to Social Security, the rules for spousal benefit entitlement are pretty easy.
If you’ve been married to your current spouse for at least one year, you’re eligible for a spousal benefit under their work record.
If you’re divorced, and not currently married, you’re eligible for a spousal benefit if the marriage lasted for at least 10 years.
How Much is the Spousal Benefit?
The spousal benefit can be as much as 50% of the higher-earning spouse’s full retirement age benefit. For example, if your spouse has a full retirement age benefit amount of $2,000, your spousal benefit amount at your full retirement age would be $1,000.
It’s important to note that this benefit can never be more than 50% of the higher-earning spouse’s full retirement benefit, but it can be less! Why? It’s based on your filing age. Depending on how old you are when you file, the spousal benefit amount will range between 32.5% and 50% of the higher-earning spouse’s full retirement benefit.
In the chart below we’ll assume that your full retirement age is 67. We’ll further assume that your spouse’s full retirement age benefit is $2,000 per month.
You probably noticed the steep penalty for filing early. You may have also noticed that the spousal benefit does not increase beyond your full retirement age. So if a spousal benefit is all that you are entitled to, there is usually not a good reason to delay filing beyond your personal full retirement age.
Another notable takeaway from the chart above is that although the reductions are represented by annual amounts, they actually decrease on a monthly basis. Not everyone cares about this, but if you want to get into the fine details of how this is calculated here’s what you need to know . . . .
The spousal benefit is reduced on a monthly basis as follows:
- (-)0.69444% each month before full retirement age, up to 36 months
- (-)0.41667% each month that exceeds 36 months
There are a couple of other parting thoughts about Social Security spousal benefits that are important to note. First, you can’t claim your spousal benefit until your spouse files (unless you’re divorced). Second, it’s important that you get this benefit right the first time. If you file early, you generally don’t get a second chance.
While the rules for spousal benefit entitlement are pretty easy, you may still have a few questions regarding your particular situation. If that’s the case, feel free to contact me to schedule an appointment. It’s important to get Social Security spousal benefits right – the first time.