Social Security Spousal Benefits: This Could Be the Most Misunderstood Rule

You'll often hear that to qualify for Social Security benefits in retirement, you need to work for a certain number of years and earn a certain amount of wages. But there's another way to get Social Security, even if you never worked.

If your current or former spouse is entitled to Social Security in retirement, you may be eligible to receive spousal benefits. In fact, you can also receive spousal benefits if you're entitled to a benefit of your own. Social Security will just pay you the higher amount of the two.

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But if you're going to be counting on Social Security spousal benefits for retirement income, it's important to know what to expect. And you don't want one commonly misunderstood rule to trip you up.

Don't overestimate your spousal benefits

It's important to claim your spousal benefits strategically to make the most of them. Though you can sign up for spousal benefits as early as age 62, if you don't wait until your full retirement age, those monthly checks will be reduced.

That said, there's no point in delaying your spousal benefit claim beyond full retirement age. Doing so only means forcing yourself to wait on money you could've had earlier.

See, when you're claiming Social Security based on your own wage history, there's a huge incentive to delay your filing beyond full retirement age. For each year you do, until you turn 70, your benefits get a permanent 8% boost.

This rule does not apply to spousal benefits, though. You can't grow a spousal benefit by delaying your claim beyond your full retirement age. The maximum amount your spousal benefit is worth is 50% of your current or former spouse's benefit at his or her full retirement age.

So let's say you're married and your spouse is eligible for $2,000 a month from Social Security at full retirement age. If you take spousal benefits at your full retirement age, you'll have a $1,000 monthly check to look forward to. If you file earlier, you'll get less. But you can't get more than $1,000 in this scenario.

Know the rules ahead of time

If you'll be counting on Social Security to provide a lot of your retirement income, whether through spousal benefits or benefits of your own, it's important to understand the rules and implications of signing up at different ages. Do plenty of reading on Social Security so you're able to file at the right time, and so you know how much income to expect from those benefits once you're old enough to collect them.

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