The Spousal Social Security Benefit Rule Couples Get Wrong Most Often
Key Points
Social Security spousal benefits have different rules than regular retirement benefits.
There's a maximum value spousal benefits are worth.
Delaying your claim beyond a certain point doesn't make sense.
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It's a nice thing to retire with a spouse. Sure, you might get on each other's nerves from time to time if you're both home frequently. But when you're not working, it's nice to have a partner's company. And financially, it can be helpful to share living expenses while potentially pooling two retirement savings accounts and two sets of Social Security benefits.
Even if one of you never worked, you and your spouse may still be eligible for two sets of Social Security checks -- regular retirement benefits and spousal benefits. But it's important to understand how Social Security's spousal benefits work. It's also crucial to avoid one trap couples tend to fall into when claiming spousal benefits.
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Recognize that spousal benefits can't grow
One big misconception about Social Security spousal benefits is that they're eligible for delayed retirement credits. Well, spoiler alert. They're not.
When you're claiming Social Security based on your own wage history, your benefits get an 8% boost for each year you delay your claim past full retirement age, up until age 70. But those delayed retirement credits do not apply to spousal benefits.
If you're collecting spousal benefits, the max you can get is 50% of your spouse's Social Security benefit at their full retirement age. And you need to wait until your full retirement age to claim your spousal benefit in full.
If you file for spousal benefits before reaching full retirement age (you can sign up as early as 62), they'll be reduced. But if you delay your spousal benefits past full retirement age, they won't grow. For this reason, delaying your claim makes no sense.
To show you the math, imagine your spouse is entitled to $2,500 a month in Social Security at their full retirement age. At your full retirement age, you can get a $1,250 spousal benefit. But you can't collect more than that.
Know the rules inside and out
If you're expecting to collect spousal benefits, it's important to understand when to file and how those payments fit into your retirement income picture. But while the above spousal benefit rule is often misunderstood, there are other aspects of spousal benefits that can be confusing.
For this reason, make sure to read up on Social Security spousal benefits ahead of retirement so you understand how they work and know at least roughly how much money to expect.
And also, if only of you is eligible to claim Social Security based on your earnings record, it's important to discuss different filing strategies together. Getting onto the same page is a great way to avoid conflict and set yourselves up for more long-term financial stability.
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