If you are or were married, do not overlook spousal benefits when you estimate your Social Security income and determine when to start receiving it. Qualifying individuals can receive up to 50% of their spouse’s full retirement benefit or their own Social Security benefit, whichever is greater. Here is a quick overview of the process.

Related Read: Considerations Before You Begin Social Security Benefits

Who is eligible?

You are eligible for Social Security spousal benefits if:

• You are at least age 62 or care for a child who is under 16 and is entitled to receive benefits on your spouse’s record or is receiving Social Security disability benefits;
• You have been married to your spouse for at least one year; and
• Your spouse is currently receiving Social Security benefits.

Spousal benefits are available regardless of whether you worked long enough to qualify for your own Social Security retirement benefits.

If you are divorced, you can claim spousal benefits based on an ex-spouse’s earnings, provided you were married for at least ten years, have been divorced for at least two years, have not remarried and your ex-spouse is entitled to Social Security benefits. Claiming spousal benefits does not affect your ex-spouse’s benefits.

How much will you receive?

Like regular Social Security benefits, the amount of spousal benefits depends on your age when you apply. If you apply at your full retirement age (FRA) — currently 66 to 67, depending on the year you were born — you are entitled to a spousal benefit equal to 50% of your spouse’s FRA benefit. However, if your own Social Security retirement benefit is greater than the spousal benefit, then you will receive your own retirement benefit.

If you apply before your FRA, both the spousal and retirement benefits are permanently reduced. Suppose, for example, that FRA for both you and your spouse is 67. If you apply at age 62, your retirement benefit will be reduced by 30% and your spousal benefit will be only 32.5% of your spouse’s FRA benefit.

Say your spouse’s FRA benefit is $3,000 per month and yours is $1,000. If you apply at your FRA (and your spouse is receiving benefits), you will receive a spousal benefit of $1,500 (50% of $3,000). If you apply at age 62, your retirement benefit will be reduced to $700 and your spousal benefit will be reduced to $975.

Your spousal benefit is based on your spouse’s FRA benefit, regardless of when he or she actually applies. Using the numbers from the previous example, if your spouse delays benefits to age 70, he or she will receive an increased benefit of $3,720 per month. And if your spouse applies early, at age 62, the benefit will be reduced to $2,100. In either scenario, your spousal benefit will be a percentage of your spouse’s FRA benefit of $3,000.

When should you apply?

Unless you need the income sooner, the best strategy for most people is to apply for spousal benefits at your FRA, provided the spousal benefit is greater than your retirement benefit. There is no point in delaying spousal benefits since they do not increase once you reach your FRA. However, if your own retirement benefit is larger than the spousal benefit, or if it will grow larger than the spousal benefit by age 70, you may be better off delaying benefits until then.

At one time, spouses had the option of taking spousal benefits at their FRA and then claiming their own increased retirement benefits at age 70. But this option was eliminated by legislation enacted in 2015, except for people born before January 1, 1954. Now, if you apply for benefits before your spouse, you will receive your own retirement benefit, if any, until your spouse applies, at which time you will begin receiving spousal benefits, if they are higher.

Related Read: When is it Best to Claim Social Security?

What about survivor benefits?

Finally, do not confuse spousal benefits with survivor benefits. If your spouse dies, you are entitled to receive survivor benefits, up to 100% of your spouse’s benefit amount. This is true even if you had been receiving a reduced spousal benefit. 

For more information, contact Jacqueline Janczewski at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Wealth Management Services.