Spousal Social Security Benefits: Essential Insights for Retired Couples

Are you currently exploring how to maximize Social Security benefits for yourself or a partner, or do you have specific questions about the timing and strategy of claiming these benefits? I’m Aaron Batkay, an advisor at Simmons Capital Group. On today’s Coffee and Cash, we’ll explore some things to know about Social Security and the Spousal Benefit.

As couples and individuals enter into their 60s, there are decisions to be made entering into a phase of work optional or retirement years. One of those decisions is Social Security selection. Social Security is a government defined benefit designed to pay retired workers a fixed income after retirement. Depending on your work history and earned income, Social Security amounts can vary greatly, even between spouses. A facet of Social Security to become familiar with is called the Social Security Spousal Benefit.

Spousal Social Security benefits are benefits paid to the spouse (or ex-spouse) of someone who is eligible for Social Security retirement or disability benefits. These benefits can be an essential part of retirement planning, particularly for couples who have one spouse with a significantly higher earnings record. Properly managing when and how to claim these benefits can substantially impact the overall financial well-being of a retiree or couple.

 Here a few important things you should know about spousal Social Security benefits:

First are the Eligibility and Requirements. To qualify for spousal Social Security benefits, you must be legally married. This includes marriages that have lasted at least one year, though there are exceptions. For instance, in cases of disability, the one-year requirement may be waived. This rule ensures that spouses who have been married for a significant period can benefit from their partner's work record, contributing to financial stability in retirement.

Generally, you must be at least 62 years old to claim spousal benefits based on your spouse's work record. However, if you begin claiming these benefits before reaching your Full Retirement Age (FRA), the amount you receive may be reduced. The reduction occurs because you're receiving benefits for a longer period, which impacts the monthly benefit amount. Waiting until your Full Retirement Age or beyond can help you receive a higher benefit.

Note, You cannot receive spousal benefits if you are eligible for a higher benefit based on your own work record. In such cases, you will receive your own benefit amount, which will be the higher of the two options. Social Security ensures that you receive the maximum benefit available to you, whether it's based on your own earnings or your spouse's work record.

 So how much is the benefit amount?

If you claim spousal benefits, you can receive up to 50% of your spouse's full retirement benefit amount. However, if you start claiming these benefits before reaching your Full Retirement Age (FRA), the percentage you receive will be reduced. The reduction is permanent and depends on how early you claim relative to your Full Retirement Age.

If your spouse passes away, you may be eligible for survivor benefits, which can be up to 100% of the deceased spouse's benefit amount.   To qualify for survivor benefits, you must have been married to your spouse for at least nine months prior to their death (with some exceptions for accidents or military service-related deaths).

Even if you are divorced, you may still qualify for survivor benefits if the marriage lasted at least 10 years and you are unmarried (unless you remarried after age 60 or 50 if disabled).

 Couples should consider the timing of when each spouse claims their benefits. Delaying claiming benefits can increase the monthly benefit amount, especially for the higher-earning spouse. For couples with a significant age difference, the "file and suspend" strategy allows one spouse to file for benefits and then suspend them, allowing the other spouse to claim spousal benefits while both spouses' benefits continue to grow until they decide to start receiving them. Every situation is different, meaning a well-thought through strategy for your situation will help you create informed Social Security selection decisions that fit for you.

Understanding these of spousal Social Security benefits can help retired couples make informed decisions to maximize their income in retirement. It's advisable to consult with your financial advisor or Social Security specialist to discuss your specific situation and optimize your benefit claiming strategy.

If you would like further information on how to claim spousal benefits or to schedule a time with an advisor, please call our office at 518.406.5624. Thank you and have a great day.