Social Security Spousal Benefits: The 1 Rule Too Many Married Couples Get Wrong

The typical path toward retirement benefits from Social Security goes something like this. You work and pay taxes on your wages every year for a minimum of 10 years, and often many more. Once you turn 62, you're eligible to file for Social Security and collect those monthly checks for the rest of your life.

But there's another way to get Social Security in retirement if you didn't work at all or don't have a robust enough work history to qualify. If you're married, you can generally become eligible for spousal benefits from Social Security based on your spouse's earning record.

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Those benefits could be a lifeline if you don't have much of a wage history and therefore aren't sitting on much, or any, retirement savings.

But there's one rule people tend to get wrong in the context of Social Security's spousal benefits. And messing it up could mean denying yourself crucial retirement income.

It's important to know when to file

Just as you can claim Social Security benefits based on your own earnings record beginning at age 62, so too can you claim spousal benefits starting at 62. But whether you're claiming your own benefits or spousal benefits, failing to wait until full retirement age to sign up for Social Security will result in reduced monthly checks for life. Full retirement age is 67 for anyone born in 1960 or later.

Now, when you're claiming Social Security on your own earnings record, just as there's a penalty for filing early, there's a bonus for filing late. For each year you delay your claim past full retirement age, up until age 70, your monthly benefits will grow 8%. And that's a boost you'll get to enjoy for the rest of your life.

But when you're claiming spousal benefits, that same incentive does not apply. The maximum spousal benefit you can get is 50% of your spouse's benefit at their full retirement age.

If you sign up for spousal benefits at your full retirement age, those benefits won't be reduced. But at that point, you're looking at your highest possible payday. So there's no sense in delaying your spousal benefit claim past that point.

For example, say your spouse's monthly benefit at full retirement age is $3,000. At your full retirement age, you're generally entitled to $1,500 a month, but not a penny more.

If you wait on Social Security past full retirement age, thinking you'll get boosted checks for delaying, all you'll do is deny yourself benefits for whatever period of time you hold off. And you could end up losing out on income for life.

See, Social Security will pay a maximum of six months of retroactive benefits dating back to full retirement age if you don't sign up by that point. But let's say you file for spousal benefits at age 68. In that case, you're beyond age 67 and 1/2, which means you risk permanently forfeiting six months of checks you didn't collect.

Make sure you know the rules

If you're counting on spousal benefits from Social Security in retirement, then it's important to understand how they work and when to sign up. While waiting for full retirement age to arrive is a smart move, waiting beyond that point won't do you any good. If anything, it might do you financial harm.

And that extends to your spouse. While waiting to take spousal benefits won't reduce your spouse's checks, you could end up losing out on household income. So it's best to read up on Social Security well ahead of retirement so you don't get tripped up by rules you aren't familiar with.

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