Retired Couple's Guide to Spousal Social Security Benefits: Crucial Facts to Understand
Many individuals consider Social Security as a program that encourages people to save for their retirement years. This view is generally accurate. Employers also have the responsibility to contribute towards their employees' retirement savings. Social Security offers an unusual provision that allows partners to claim benefits based on their spouse's earnings.
Let's delve into how these partner Social Security benefits function. Here are four essential bits of information for all retired couples.
1. When can a spouse claim partner Social Security benefits?
It's crucial to know that you can't claim partner Social Security benefits before your spouse starts receiving benefits. However, your spouse doesn't have to reach their full retirement age before you can claim partners Social Security benefits. Your spouse can receive either retirement or disability benefits from Social Security.
Age is another factor to consider. You must be at least 62 years old (the earliest age for retrieving retirement benefits) to claim partner benefits.
An exception to this rule exists. If you are caring for a child less than 16 years old or a child who is disabled and entitled to benefits on your spouse's record, you can claim partner benefits at any age.
2. What will the spouse's Social Security benefit be?
Your partner Social Security benefit will be determined by the amount of benefits your spouse is eligible to receive at their full retirement age. If you wait to claim partner benefits until your full retirement age, you can receive up to half of your spouse's benefit amount.
However, the Social Security Administration (SSA) will examine the amount of retirement benefits you would receive based on your own work record against the partner benefits you could receive based on your spouse's benefits. You'll receive the higher amount.
Remember that you must apply for your own retirement benefits simultaneously when applying for partner benefits. This is known as "deemed filing." It was introduced in January 2016 to prevent individuals from strategically choosing when to apply for different benefits to maximize their earnings.
Can you claim partner Social Security benefits before reaching your own full retirement age? Yes. However, your benefits will be reduced by 25/36 of 1% for each month you receive benefits before your normal retirement age, up to 36 months. If you retire more than 36 months before your full retirement age, your benefit will be further reduced by five-twelfths of 1% per month.
3. Does it make financial sense for partners to delay claiming partner benefits after their full retirement age?
Your spouse can enhance their retirement benefits by delaying filing for Social Security beyond the full retirement age. Anyone born in 1943 or later can amplify their retirement benefits by 8% per year by delaying claiming benefits past age 70. This equates to a maximum increase of 24% for delaying – an attractive return on investment for many.
However, does it make financial sense for partners to delay claiming partner benefits after their full retirement age? Regrettably, no. The highest amount you can receive with partner benefits is 50% of your spouse's benefits at their full retirement age.
4. Can a divorced partner claim partner benefits?
Even if you're divorced, you may be eligible to claim partner Social Security benefits based on your former spouse's work record. The condition is that you must have been married for at least 10 years. SSA's rules also allow "some valid non-marital legal relationships" to be eligible for partner benefits.
In terms of finance, delaying claiming partner Social Security benefits beyond the full retirement age does not offer the same advantage as for the original retiree, as the highest amount a spouse can receive is still 50% of their spouse's benefits at their full retirement age. Additionally, careful financial planning may be necessary when considering the impact of partner Social Security benefits on retirement savings and other sources of income.
