Many people view Social Security as a plan that forces individuals to save for their retirement. That view is mostly correct. Employers must contribute to the retirement savings of their workers, too. There's also a twist to Social Security that allows spouses to claim benefits based on their husbands' or wives' benefits.
How do these spousal Social Security benefits work? Here are four things all retired couples should know.
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1. When can a spouse claim spousal Social Security benefits?
Importantly, you won't be able to claim spousal Social Security benefits before your spouse is receiving benefits. However, your spouse doesn't have to be at his or her full retirement age before you can claim spousal Social Security benefits. Also, your spouse can receive either retirement or disability benefits from Social Security.
Your age matters, too. You must be at least 62 years old (the earliest age allowable for claiming retirement benefits) to claim spousal benefits.
There is an exception to this, though. If you have a child who is under 16 years old in your care or a child who is disabled and is entitled to benefits on your spouse's record, you can claim spousal benefits at any age.
2. How much will the spouse's Social Security benefit be?
Your spousal Social Security benefit will be based on the amount of benefits your husband or wife is eligible to receive at their full retirement age. If you wait to claim spousal benefits until your full retirement age, you can receive up to half the amount of your spouse's benefit.
Again, though, there's a catch. The Social Security Administration (SSA) will compare the amount of retirement benefits you would receive based on your own work record against the spousal benefits you could receive based on your husband's or wife's benefits. You'll receive the higher of the two amounts.
Note that you must apply for your own retirement benefits at the same time you apply for spousal benefits. This is called "deemed filing." It went into effect in January 2016 to prevent people from timing when they applied for different benefits to make more money.
Can you claim spousal Social Security benefits before reaching your own full retirement age? Sure. 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 pay off for spouses to delay claiming spousal benefits after their full retirement age?
Your spouse can increase his or her retirement benefits by waiting past the full retirement age to file for Social Security. Anyone born in 1943 or afterward can boost their retirement benefits by 8% per year by delaying claiming benefits through age 70. This translates to a maximum increase of 24% for waiting -- not a bad return on investment for many.
So does it pay off for spouses to delay claiming spousal benefits after their full retirement age? Unfortunately, no. The most you'll be able to receive with spousal benefits is 50% of your spouse's benefits at his or her full retirement age.
4. Can a divorced spouse claim spousal benefits?
You could be eligible for claiming spousal Social Security benefits based on your former spouse's work record even if you're divorced. The catch is that you must have been married for at least 10 years. SSA's rules also state that "some valid non-marital legal relationships" may be eligible for spousal benefits.
