Social Security Spousal Benefits: What to Know About the Rules and Their Exceptions

 

social security spousal benefits

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.

Why? Because this specific benefit can help you boost the income available to you to live on once you hit retirement age.

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 were eligible to receive higher benefit because the spousal benefit amount was greater than their own benefit.

Others never worked outside the home or paid Social Security tax. They have no benefit of their own, but thanks to the Social Security spousal benefit available under their spouse’s work record, they can still receive payments.

This particular benefit doesn’t just provide retirement income, either.

As an eligible spouse, you could also receive premium-free Medicare benefits. Receiving these can help you reduce your out-of-pocket healthcare costs, allowing you to stretch your nest egg even further to create the retirement you want.

Clearly, Social Security spousal benefits offer serious value to those approaching the right age to file. So how do you access them, and what do you have to know to best work the rules?

Let’s take a look at what it takes to qualify as well as what benefits you may receive as an eligible spouse.

Before you dive into this article, you may want to watch my short video Social Security Basics.

What Does It Take to Qualify for Social Security Spousal Benefits?

Unlike most rules related to Social Security, the rules for the spousal benefit entitlement are pretty straightforward and easy to understand.

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.

Pretty simple, right? (There are two big exceptions to this rule, but we’ll talk about those in more detail a little later in this article. Stay tuned.)

You may also qualify for the spousal benefit If you’re divorced but the marriage lasted for at least 10 years and you’re not currently married.

social security length of marriage rule

How Much Is the Spousal Benefit?

If you’re eligible and can qualify, the spousal benefit can be as much as 50% of the higher-earning spouse’s full retirement age benefit.

If your spouse’s full retirement age benefit amounts to $2,000 per month, your spousal benefit at your full retirement age could amount to $1,000 per month.

It’s important to note that this benefit cannot be more than 50% of the higher-earning spouse’s full retirement benefit… but it can be less!

That’s because the benefit is  also 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.

Check out the chart below to get an idea of how the benefit works and what your payment might be if you can take advantage of spousal benefits. The chart assumes that your full retirement age is 67 and your spouse’s full retirement age benefit is $2,000 per month.

spousal benefit reduction

Did you notice the steep penalty for filing early? You receive significantly less in payments if you choose to file sooner rather than wait until full retirement age.

You may have also noticed that the spousal benefit does not increase beyond your full retirement age. When considering your own Social Security benefit, there can be a lot of advantages to waiting to file and delaying when you start receiving payments well past your retirement age, but that’s not the case here. 

So if a spousal benefit is all that you are entitled to, as we assume in the chart above, there’s usually not a good reason to delay filing beyond your personal full retirement age because that won’t increase how much your receive.

How to Calculate Your Own Spousal Benefits the Right Way)

The spousal benefit calculation is straightforward if you don’t have a benefit of your own. Remember, in that case, it’s between 32.5% and 50% of the higher-earning spouse’s full retirement age benefit, depending on your filing age.

However, it can seem a little more complicated if you have Social Security benefits from your work history.

And to keep things interesting, the Social Security Administration decided that a different calculation method should be used to determine how much each benefit should increase/decrease based on your filing age.

Fun, right?

As complicated as Social Security benefits can seem, there is a way to correctly calculate how much your spousal benefit will be if you qualify to receive it.

I’ve made a video that goes over this calculation step-by-step. Check it out! VIDEO: How To Calculate Spousal Benefits The RIGHT Way  

social security spousal benefits reduction amount

If you understand how they break down the individual benefits, it’s not hard to use the table above to quickly figure out what your approximate benefit will be. Here’s an example.

Joe and Julie each have a Social Security benefit from work they individually performed. Julie’s benefit at her full retirement age is $800 per month. Joe’s benefit at his full retirement age is $2,000.

Assuming they are both full retirement age when they file, Joe will be entitled to a benefit of $2,000 and Julie will be entitled to the greater of her own benefit or half of Joe’s benefit.

Since half of his is greater than her own individual benefit ($1,000 vs. $800), she will receive $1,000 per month.

Sounds simple, right?

In this scenario, it really is simple. But when it comes to calculating different age combinations, it’s crucial to understand that Julie will always receive her own benefit amount first and then receive a “spousal top-off” to get her benefit to half of Joe’s.  

But Julie’s own benefit, and the benefit she’d get if Joe’s benefit was greater, gets treated to a different calculation with regard to how they are increased or decreased based on filing age.

social security spousal benefit calculation example

For example, if Julie filed at 62, her $800 benefit would be reduced to $560. The $200 “spousal top-off” would be reduced from $200 to $130.

Keep in mind that, as per the chart above, the reduction from $200 to $130 is due to Julie’s own benefit being reduced by 70% because she filed early — so her spousal portion is reduced by 65%.

In this scenario her combined benefit would be $690.

It’s important to note that the spousal top-off is only available once the higher earning spouse files for his/her own benefit.

This means that if Julie files for her own benefit, but Joe does not, Julie would only be entitled to the benefit on her own work record. Once Joe filed, she would begin receiving the additional spousal top-off benefit.

It’s also important for planning to understand that the spousal benefit would be reduced (or not) based on age of entitlement to that benefit. This means that Julie’s reduction to her own benefit would be based on her age when she filed for her benefit.

However, her reduction to the spousal benefit would be based on her age when Joe filed for his benefit.

So, if Julie filed when she was 62, her own benefit would be reduced. If she was 67 when Joe finally got around to filing, her spousal top-off would not be reduced.

Divorced? Know This Significant Exception to the Rule

When planning your Social Security filing strategy, it’s important to note that you cannot file for a spousal benefit until the higher earning spouse files for their benefit.

But this does not apply if your are filing for a spousal benefit from an ex-spouse.

If your ex-spouse has not applied for retirement benefits you can receive benefits on his or her record if you have been divorced for at least two years.

More Than Just Income:  The Social Security Spousal Benefit and Medicare Coverage

If you are eligible for a Social Security spousal benefit, you are also entitled to premium free part A Medicare at age 65. The catch?

You’re entitled to Medicare only if your spouse is at least 62 years old.

If you are more than 3 years older than your spouse, you may have to buy Medicare Part A until your spouse turns 62. That’s when your premium-free benefit would start. The Part A monthly premium is $422 in 2018.

The Two Exceptions to Know Around the 1 Year Marriage Requirement

Exception to spousal benefit waiting period

Normally, you must be married for at least 12 continuous months to meet the spousal benefit duration-of-marriage requirement. However, there are two exceptions to this rule.

Exception 1

If you marry someone who is the natural mother or father of your child, the one year requirement is waived.

Here’s how the Social Security Administration puts it:

Be the natural mother or father of the worker’s biological son or daughter; i.e., this requirement is met if a live child was born to the number-holder and claimant although the child need not be alive.”

Exception 2

The 1-year requirement is also waived if you were entitled (or potentially entitled!) to Social Security benefits on someone else’s work record in the month before you were married.

An example of these benefits would be spousal benefits, survivor benefits or parent’s benefits.

For example, let’s assume you will be eligible for a spousal benefit from your ex-husband Joe. If you remarry, you wouldn’t have to wait the full 12 months to get a spousal benefit from your new spouse. Instead, you’d be immediately eligible.

This topic is closely related to the Social Security Survivor Benefit. I’ve written an in-depth but easy-to-understand article titled Social Security Survivor Benefits: The Complete Guide to Who Gets What and How to Calculate It if you want to learn more.

Parting Thought

Hopefully, this article helps illustrate the importance of fully understanding all your options when it comes to Social Security — and there are a lot of options to choose from.

When it comes to your Social Security spousal benefit in particular , it’s important that you make the right choices the first time.

If you file early, you generally don’t get a second chance. And remember, the average retired family receives 38% of their income from Social Security benefits — so it can cost you quite a bit to leave money on the table here.

Want to learn more? Check out this article for a step-by-step guide on how to use the Social Security calculator.  

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