Millions of Americans rely on Social Security for most or all of their retirement income. Unfortunately, not everyone has enough career earnings to qualify for a valuable allowance. Whether it’s due to inconsistent work, staying home to raise children, or anything else, it could mean you won’t receive Social Security benefits.
The good news is that there is another way to get Social Security benefits without using your earnings record: spousal benefits. Spousal Social Security benefits allow you to claim Social Security based on your partner’s earnings record. If you’re nearing retirement and think this option might be right for you, here are three things you should know.
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The earliest age you can claim spousal benefits is 62 (same as standard benefits), except for those looking after a disabled child or under 16. In the latter case, you can claim spousal benefits at any age.
The other two criteria are that your spouse must already be claiming benefits and you must have been married for at least one year. If you are divorced and have been married for at least 10 years, you can also claim spousal benefits as long as you are unmarried (even if your ex-spouse has remarried).
If you tick these three boxes, you are entitled to receive up to 50% of your spouse’s Primary Insurance Amount (PIA), which is the monthly payment they would receive when they claim benefits at Full Retirement Age (FRA). For example, if their VIP is $2,400, you can get up to $1,200. Below is the FRA by year of birth:
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As with standard benefits, claiming spousal benefits before FRA will result in monthly payments being deducted based on how far you are from FRA. The difference between the two is how much the benefits are reduced. A first-time spouse applying for benefits before FRA is reduced by 5/9 of 1% per month for the first 36 months. For each additional month thereafter, benefits are further reduced by 5/12 of 1%.
Filing early for spousal benefits reduces more. For the first 36 months, benefits are reduced monthly by 25/36 1%. Every subsequent month after that, the reduction is reduced to 5/12 of 1% per month.
In this case, if your FRA is 67 and you claim standard benefits at age 64, they would be reduced by 25%. If you claimed spousal benefits at age 64, they would be reduced by 30%. If you claimed standard or spousal benefits at age 62, they would be reduced by 30% and 35% respectively.
Another notable difference between standard and spousal benefits is that monthly spousal benefits are not increased if you delay filing through FRA. So, realistically, this should be their last statement.
If you claim spousal benefits and your partner dies, Social Security will convert your spousal benefits into survivor benefits. Unlike spousal benefits, survivor benefits allow you to receive up to 100% of your deceased spouse’s benefit, including any deferred retirement credits they earned before they passed away.
For example, if your spouse’s PHI was $2,400 a month, but they delayed benefits for two years and received $2,784, you would receive the full $2,784 instead of the maximum $1,200 you would be entitled to in spousal benefits.
A widow(er) is eligible for survivor benefits at age 60, or age 50 if disabled, if married for at least nine months prior to the death of the primary claimant spouse. If you were married for at least 10 years and then divorced, you may also be eligible for survivor benefits.
You cannot receive both spousal and survivor benefits, so this benefit conversion benefits you because spousal benefits are subject to a 50% cap. However, like standard and spousal benefits, claiming survivor benefits will have monthly payments deducted against your FRA.
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Spousal Social Security Benefits: 3 Things All Retired Couples Should Know was originally published by The Motley Fool
