A Social Security check may only have your name on it, but if you're married, the decisions you make about when to sign up can affect your spouse, as well. The same goes for any dependents claiming benefits on your work record. Here's a look at three ways that your Social Security moves affect your spouse's benefit and what you can do to maximize both.
What are spousal Social Security benefits?
Before we dive into the particulars of how your Social Security decisions affect your partner, it helps to have a basic understanding of spousal Social Security benefits.
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Generally, you can claim Social Security benefits on your own work record if you've worked long enough to earn 40 credits. One credit is defined as $1,510 in earnings in 2022, and you can earn a maximum of four credits per year.
But if you're married, you also have the option of claiming a spousal benefit. This will be up to half of your partner's benefit at their full retirement age (FRA). For most workers today, FRA is somewhere between 66 and 67.
You only get to claim one benefit, and the Social Security Administration automatically gives you the larger of your own benefit or your spousal benefit. But the one that's bigger depends, in part, on the moves each person makes.
1. Your income during your working years affects their spousal benefit
Your Social Security benefit is based on your average monthly income over your 35 highest-earning years, adjusted for inflation. So anything you do today to increase your income will also boost your Social Security checks later, unless you earn over $147,000 this year. That's the maximum income subject to Social Security taxes, so earning more won't boost your benefit any further.
For most people, that's not an issue. And applying for a new job, asking for a raise, or starting a side hustle are all valid ways to increase your future Social Security benefit. And they'll boost the spousal benefit available to your partner, as well.
2. Claiming early reduces your partner's spousal benefit
A Social Security spousal benefit is worth up to 50% of the worker's benefit at their FRA. But claiming early can have serious consequences for both partners.
Every month you claim Social Security before your FRA reduces your checks -- and consequently, the spousal benefit that your partner is entitled to. Signing up for Social Security right away at 62 means your checks would shrink by 30% and your spouse's checks by 35%.
To put this in perspective, if you qualified for a $1,000 benefit at your FRA of age 67, your spouse would get $500 per month if you waited until 67 to sign up. But if you claimed at 62, you'd only get $700 per month, and your spouse would get $325 per month.
That doesn't mean starting early is always the wrong move. If you need the money to survive or you don't expect to live long, signing up early can be the right decision. But if you think you'll live until your 80s, you're probably better off delaying Social Security.
Every month you wait to sign up increases your benefits slightly until you reach your maximum benefit at 70. This is 124% of your full benefit per check if your FRA is 67, or 132% if your FRA is 66.
Your spouse can also benefit by you delaying benefits, but unfortunately, their benefit maxes out when you reach your FRA. They'll never get more than half your benefit at your FRA -- $500 in our example above -- even if you delay benefits longer than this.
3. Your spouse can't claim a spousal benefit until you sign up
Another thing worth noting is that your spouse can't claim a spousal benefit until you sign up for Social Security. But they can still claim Social Security on their own work record if they qualify.
If you know your spouse will get more from a spousal benefit than they will from their own work record, it might be smart to have them sign up for benefits before you do. They can claim as much as they can on their own work record, and their benefits can help you delay until you're ready to sign up. Then, when you apply, the Social Security Administration will automatically switch your partner to a spousal benefit.
But every couple is unique. That's why it's important to sit down with your spouse and talk about when each of you plans to retire and claim Social Security so you can coordinate your efforts. Create a my Social Security account if you haven't already to see how much you'll get from the program based on your work history to date, and use this as your guide when thinking about the ideal time for each of you to start claiming benefits.
