Social Security provides crucial financial support for millions of Americans, including married couples who can tap into either their retirement benefits or spousal benefits.
By understanding how to strategically claim these benefits, couples can potentially increase their total Social Security income. Below are the essential strategies to maximize Social Security spousal benefits.
Spousal Benefits Explained
Spousal benefits allow one spouse to claim Social Security based on the earnings record of the other spouse. This can be a lifeline for nonworking spouses or those with lower earnings histories.
To qualify for spousal benefits, the working spouse must have earned at least 40 credits by paying into Social Security for approximately 10 years.
The spousal benefit can be as high as 50% of the working spouse’s full retirement benefit if claimed at full retirement age (FRA), which is 67 for those born in 1960 or later.
Understand Spousal Benefit Amounts
The amount a spouse can receive depends on several factors:
- Full Retirement Age (FRA): If the spouse waits until FRA, they can receive 50% of their spouse’s benefit.
- Early Benefits: If the spouse claims benefits at age 62, they receive a reduced amount, as low as 32.5% of their spouse’s primary insurance amount.
- Delayed Benefits: If both spouses delay claiming their benefits until age 70, they increase their benefit amounts by 8% for each year past FRA, though this only applies to retirement benefits, not spousal benefits.
Key Strategies to Maximize Spousal Benefits
1. Delay Benefits for Maximum Growth
One of the simplest ways to maximize Social Security spousal benefits is to delay the start of both spouses’ benefits.
If both spouses wait until age 70 to claim, their retirement benefits will increase by 8% annually between FRA and age 70, ensuring they receive the highest possible benefit.
Additionally, continuing to work during this time can increase lifetime earnings, which boosts the benefit calculation, especially for lower-earning years.
2. Use a Split Strategy
In situations where one spouse has significantly higher earnings, a split strategy may be the most effective. The higher-earning spouse delays claiming benefits until age 70 to maximize the benefit amount.
Meanwhile, the lower-earning spouse can begin collecting their Social Security at FRA. Once the higher-earning spouse turns 70, the lower-earning spouse can switch to claiming spousal benefits if they are higher than their own.
This strategy provides the couple with a steady income while waiting for the higher benefit to grow.
3. Consider Divorced Spousal Benefits
Divorced spouses can also claim spousal benefits if they meet specific criteria. They must have been married for at least 10 years, be unmarried, and at least 62 years old.
The benefit calculation works similarly to current spouses, and the worker’s benefits won’t be affected by an ex-spouse’s claim.
This can be especially beneficial for those who had lower earnings and would otherwise receive smaller benefits based on their work history.
4. Avoid Early Claims for Maximum Payout
Starting spousal benefits early, before reaching FRA, permanently reduces the amount received. While it may be tempting to start benefits at age 62, waiting until at least full retirement age guarantees a higher payout.
For instance, claiming benefits at 62 may result in only 32.5% of the working spouse’s benefit, compared to 50% at FRA.
5. Use Online Tools for Planning
The Social Security Administration provides an online calculator to help couples see the effect of early or delayed claims on their spousal benefits. Financial advisors can also model different scenarios to determine the best time to start claiming benefits.
When to Claim Spousal Benefits
Determining when to claim spousal benefits depends on each couple’s financial situation. For some, it might make sense to claim early to supplement income, while others might benefit more from delaying.
It’s important to remember that when a spouse files for spousal benefits, they are also automatically filing for retirement benefits, so they cannot let their retirement benefits grow while only receiving spousal benefits.
How to Apply for Spousal Benefits
There are three ways to apply for Social Security spousal benefits:
- Online at the Social Security Administration’s website.
- By calling 1-800-772-1213.
- By visiting a local Social Security office.
Applicants should have important documents such as their birth certificate, marriage certificate, and tax returns on hand.
For those eligible for both retirement and spousal benefits, Social Security will automatically provide the higher benefit.
Widows and Divorced Spouses
In addition to spousal benefits, widows and widowers can claim survivors’ benefits, which are calculated based on the deceased spouse’s benefit amount. Widows can start claiming as early as age 60, though claiming early reduces the benefit amount.
Divorced spouses, as mentioned earlier, are also eligible for spousal benefits, provided they meet the required criteria.
Maximizing Social Security spousal benefits requires careful planning. By delaying benefits, using a split strategy, and considering other factors such as divorced spouse eligibility, couples can ensure they receive the highest possible Social Security payments.
Working with a financial advisor or using online calculators can help couples navigate the complex rules and make informed decisions about when to claim benefits.
FAQs
What is the maximum spousal benefit amount?
It is 50% of the working spouse’s benefit at full retirement age.
Can divorced spouses claim spousal benefits?
Yes, if they were married for at least 10 years.
What happens if spousal benefits are claimed early?
The benefit is reduced, as low as 32.5% of the spouse’s benefit.
When should both spouses delay benefits?
When they want to maximize their Social Security income by waiting until age 70.
Are spousal benefits affected by the worker’s remarriage?
No, spousal benefits for an ex-spouse are not impacted by remarriage.
