Key Points
Social Security pays retirement benefits to current and former spouses of eligible recipients.
Spousal benefits have a maximum value.
Chasing a larger spousal benefit could cause you to lose out on money.
Social Security spousal benefits can be a valuable source of income in retirement, especially for couples where one spouse earned significantly more than the other or where one spouse didn't work and earn money at all. But the rules surrounding these benefits aren't always so clear.
One common misunderstanding about Social Security spousal benefits relates to the timing of filing a claim. If you're eligible for spousal benefits from Social Security, you may be planning to delay your claim to boost your monthly checks. Unfortunately, that's not how spousal benefits work.
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Delaying won't do you any good
If you're not familiar with Social Security spousal benefits, here are a few basic rules:
- You can sign up for spousal benefits as early as age 62, but if you don't wait until full retirement age, those benefits will be reduced.
- If you're married, you have to wait until your spouse claims Social Security to file for spousal benefits.
- If you're divorced and claiming spousal benefits on an ex's record, you generally do not have to wait for them to file.
- Your spousal benefit maxes out at 50% of your spouse's full retirement age benefit.
That last point is really important. And it tends to be a source of confusion.
When you're filing for Social Security based on your own earnings record, there's a huge incentive to delay your claim past full retirement age. For each year you do, until you turn 70, your monthly benefits get an 8% boost.
But spousal benefits don't offer delayed retirement credits like benefits claimed on your own earnings record. Rather, the maximum amount you'll be eligible for is 50% of your spouse's full retirement age benefit. And, as mentioned above, you can snag that amount by waiting until your own full retirement age to file.
However, there's no sense in delaying your spousal benefit claim beyond your full retirement age. Not only will your monthly payments not grow, but you could potentially lose out on months of benefits you were otherwise entitled to receive.
Don't let a big mistake cost you
Social Security filing decisions are often framed around maximizing benefits. That's a good approach, but it's important to understand how it relates to spousal benefits.
Waiting too long to claim a spousal benefit is a mistake that could have big financial consequences. So rather than deny yourself money, simply plan to claim spousal benefits at your full retirement age. And if you're worried the benefit you get at that point won't cut it, look at other ways to supplement your retirement income, such as working a part-time job or joining the gig economy for extra money.
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