What You Need to Know About Social Security Spousal Benefits

by | Jun 14, 2023 | Financial Planning

When the Social Security program was established in 1935, it provided guaranteed retirement income for some Americans. However, only those who had worked outside the home and paid Social Security tax were eligible for benefits. This left spouses who performed unpaid labor in the home without a source of financial independence in retirement. Fortunately, the Social Security Administration introduced spousal benefits to remedy this discrepancy.

Since 1939, women have been able to collect Social Security spousal benefits based on their partner’s earnings record. Later in 1950, these benefits were expanded to both male and female spouses. Today, most people who are married, or were married for an extended period, can claim Social Security spousal benefits once they reach retirement age.

What are Social Security spousal benefits?

Social Security Spousal Benefits are retirement benefits paid to spouses who did not work or earned significantly less than their partner during their working years. These benefits can help reduce the retirement income disparity between partners.

In many cases, minor children can also claim benefits based on a parent’s earnings record. These benefits are similar to spousal benefits but known as ‘child’s benefits.’ This article will focus on Social Security spousal benefits. If you need assistance with child’s benefits, contact an experienced advisor.

Social Security Spousal Benefits – Eligibility and Amount

The eligibility criteria for Social Security spousal benefits vary depending on whether you are currently married to the partner whose earnings you plan to use to qualify for benefits.

To claim Social Security spousal benefits on a current spouse’s earnings record:

  • your spouse must be receiving Social Security benefits.
  • you must have been married to your spouse for at least a year.
  • you must be at least age 62 or have a child under age 16 who receives Social Security disability benefits.

To claim Social Security spousal benefits on a former spouse’s earnings record:

  • you must have been married at least 10 years.
  • you must be currently unmarried.
  • you must be at least age 62 or have a child under age 16 who receives Social Security disability benefits.

If you have been divorced longer than two years, you can claim benefits on a former spouse’s record even if they are not currently receiving benefits. However, to claim benefits on a current spouse’s record, they must be currently receiving Social Security benefits.

Amount of Social Security Spousal Benefits

If you meet the eligibility requirements, you are entitled to spousal benefits up to 50% of your spouse or former spouse’s Primary Insurance Amount [PIA]. This is the amount your partner would receive at their Full Retirement Age [FRA]. Since spousal benefits are calculated based on PIA, your benefit amount is not impacted by your spouse taking benefits early or delaying benefits past their FRA.

Factors That Can Reduce Social Security Spousal Benefits

In addition to eligibility requirements, there are other factors that can impact the amount of your Social Security spousal benefits. Consider the following scenarios that can reduce your benefit amount.

Taking Benefits Early

You receive the full 50% of your partner’s benefit amount if you begin receiving benefits at your FRA. However, if you begin receiving benefits prior to your FRA, your spousal benefits are permanently reduced. For example, your benefits would be reduced to 32.5% of your spouse’s PIA if you began receiving them at age 62. There is one exception to this rule – spousal benefits are not reduced when you take them early if you are caring for a child who is under age 16 and receiving Social Security disability benefits.

The Earnings Test

If you claim benefits early and are still working, you may be subject to the earnings test. This rule withholds a portion of your benefits for each year that you work and receive benefits prior to your FRA. After you reach your FRA, the withheld amount is paid back to you over the course of your life.

Government Pension Offset Rule

The Government Pension Offset [GPO] rule is another factor that can reduce your Social Security spousal benefits. If you receive a pension from employment at which you did not pay Social Security tax, your spousal benefits could be reduced by up to two-thirds.

An experienced financial advisor can help you determine how these factors impact your Social Security benefits. In addition, the right advisor can help you determine how Social Security fits into your retirement plan, choose the optimal time to begin receiving benefits, and coordinate benefits with your spouse.

Optimize Your Social Security Benefits with Financial Fingerprint™ by Brookstone Wealth Management

At Brookstone Wealth Management, we empower our clients to meet their retirement goals. We do this by creating a long-term partnership focused on coaching, teaching, and mentoring. We call this philosophy Financial Navigation Made Simple.

Our comprehensive financial plan, Financial Fingerprint™, is quick to assemble, easy to understand, and simple to modify as your circumstances change. Financial Fingerprint™ can help you understand your current financial position, quantify your retirement goals, and turn those goals into a reality. It also considers all your retirement income – including Social Security – when developing the plan for your dream retirement.

To learn more and get started today, contact us.