Suppose that you paid into Social Security from age 18 to 30, but after getting married, took a break from your career between the ages of 30 and 40 to take care of your kids. After several decades of marriage, you end up getting divorced before you reach full retirement at age 65. Where does that leave you in terms of Social Security benefits? You may be entitled to very little Social Security income after a ten-year hiatus and lower career income.
The good news is that the Social Security Administration provides spousal benefits in those situations, which provide income to current spouses, widowed spouses, and even ex-spouses. These benefits are typically half of your spouse’s, deceased spouse’s, or ex-spouse’s full retirement age benefit, and they do not reduce or change the amount that your current spouse, ex-spouse, or ex-spouse’s current spouse receives.
If you didn’t pay into Social Security for at least 40 quarters (10 years), but your spouse did, or if your earnings were less than your spouse’s, you may benefit from your spouse’s Social Security income. You could receive much more than your own benefit amount if your spouse made a lot more income – even if both of you worked. In some cases, the calculus surrounding spousal benefits may impact decisions like getting remarried or taking a pension.
In this post, we will look at some common questions and concerns about spousal benefits, as well as some tips to maximize your retirement income.
Spousal Benefits for Married Couples
You may be eligible for spousal benefits if you’re at least 62 years old and you have a spouse that is receiving retirement or disability benefits. For example, if you are 65 years old and your spouse is 70 years old and receiving Social Security benefits, you are eligible to receive spousal benefit. The maximum benefit amount for spousal benefits is 50 percent of your spouse’s full retirement age amount.
The Social Security Administration automatically calculates and pays the higher of your benefit and your share of your spouse’s benefit. This is a matter of inquiry, as many of the Social Security employees you meet won’t know and will have to investigate further.
Spousal benefits play by the same rules as traditional Social Security income. While benefits are available at age 62, they will be permanently reduced if you take them before your full retirement age and delaying them until age 70 can significantly increase your benefit. In fact, top earners could receive as much as $200,000 more in lifetime income by delaying their benefit, according to Kiplinger, which makes it a strategy worthy of careful consideration.
If you’re already receiving benefits, the Social Security Administration will automatically pay out your benefits first. You will receive additional benefits if your spousal benefits are greater than your own benefits up to the value of your spousal benefits. For example, if your benefit is $900 per month and your spouse’s benefit is $2,000 per month, you will receive a total of $1,000 per month, which consists of your $900 benefit and $100 of spousal benefits.
For more information, see the Social Security Administration’s Benefits For Your Spouse page.
Spousal Benefits for Divorcees
You may be eligible to receive a spousal benefit if you’re divorced based on your ex-spouse’s employment record if you’re both over 62 years old – even if they haven’t filed for their own benefits. For example, if you and your ex-spouse are both 65 years old, but your ex-spouse plans to delay their Social Security benefit until age 70 to maximize it, you can still claim your portion of their benefit, as long as you meet the criteria.
The criteria to receive an ex-spousal benefit include:
- Your marriage lasted ten years or longer;
- You are unmarried;
- You have been divorced for at least two years;
- Your ex-spouse is entitled to Social Security retirement or disability benefits;
- The benefit that you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work; and,
If you’re caring for a child who is receiving benefits, you can immediately begin receiving exspousal benefits to help you care for the child.
For more information, see the Social Security Administration’s If You Are Divorced page.
Spousal Benefits for Widows
You can collect a survivor’s benefit as early as age 60 if you’re a widow or widower, along with a $255 lump sum payment upon death. If your spouse had already started receiving benefits before they passed away, you will continue to receive your benefit or your spouse’s benefit, but you cannot receive both benefits. If they have not started receiving benefits, you can choose when to receive their benefits.
Survivor benefits based on age will be roughly the same total benefit over a lifetime, whether they start early or at full survivors’ retirement age, but there may be an advantage to taking them early and delaying your own benefits. You can choose to restrict your application to file for either your own benefit or the widow or widower benefit and choose to later switch to the other benefit amount to maximize your own benefit.
If you were divorced from the deceased spouse, you may still be eligible for the same benefits as a widow or widower, as long as your marriage lasted ten years or more. You may also be eligible for benefits at any age and regardless of the time that you were married if you’re caring for a child that’s under the age of 16 or disabled that is receiving benefits on the record of the former deceased spouse.
For more information, see the Social Security Administration’s Survivors Benefits page.
Other Strategies to Consider
Married couples used to leverage a strategy known as file and suspend, whereby one spouse would file but immediately suspend their benefits which enabled the other spouse to file for spousal benefits. But in November 2015, new laws were passed saying that anyone that suspended their benefits after April 30, 2016 would suspend all benefits based on their record, which makes spousal benefits unavailable as long as they’re suspended.
If you were born on or before January 1, 1954, and you’re at full retirement age or older, you can specify on your application that it’s a restricted application and choose to claim either your own benefit or a spousal benefit. The advantage of this approach is that you can claim your spousal benefit and delay your own benefit until age 70 to maximize the benefit amount.
The Bottom Line
Spousal benefits can play a big role in retirement planning whether in regards to current spouses, ex-spouses, and deceased spouses. By accounting for these factors, you can maximize your familial benefits and retirement income.
If you would like to learn more about spousal benefits and other Social Security issues, you may want to consider hiring a full-service financial advisor, such as TFS Advisors. Contact us today for a free consultation to learn more about how we can work together to maximize your retirement income.