5 Social Security Spousal Benefit Rules That Could Change How Much You Collect

Social Security is one of the senior benefits retirees tend to rely on most. And typically, you earn Social Security by paying taxes on wages throughout your career.

But there's another path toward collecting Social Security in retirement — spousal benefits. If you're married to someone who qualifies for Social Security, you may be eligible for benefits based on that. And some eligible divorcees are eligible to file for spousal benefits from Social Security based on a former spouse's record.

Social Security spousal benefits work differently than regular Social Security benefits, though, so it's important to know these key rules before you file.

Filing early results in reduced benefits

Just as age 62 is the earliest you can file for Social Security when you're signing up based on your own earnings record, so too is 62 the earliest age to file for spousal Social Security benefits. But you may not want to claim your spousal benefits at 62.

Social Security spousal benefits max out at 50% of an eligible spouse's full retirement age (FRA) benefit. If you file for spousal benefits at 62 instead of waiting for your FRA, the spousal benefit payment you collect may end up being as low as 32.5% of your spouse's FRA benefit. Since you're starting out with a limited benefit to begin with, you may want to try to wait until FRA to sign up.

Filing late doesn't boost benefits

When you're claiming Social Security based on your own earnings record, you can accumulate delayed retirement credits for each month you delay your claim, up until you turn 70. Delayed retirement credits can boost your benefits by 8% per year.

But Social Security spousal benefits are not eligible for delayed retirement credits. What this means is that there's no sense in delaying your spousal benefit claim past your FRA. It won't result in a boost, and you'll only delay that money.

There's no double dipping

If you're eligible for Social Security based on your own wage history, you can still collect spousal benefits. But you can't collect your own benefit and a spousal benefit at the same time.

Social Security will pay you one retirement benefit at a time, and you'll get the largest one you're eligible for. So let's say your benefit based on your wage record is $1,100 per month, but your spouse's FRA benefit is $2,400. That means your spousal benefit could be worth $1,200, in which case Social Security will pay you that larger sum. But in this example, you wouldn't get $2,300 per month.

Spousal benefits become survivor benefits if your spouse passes away

While Social Security spousal benefits max out at 50% of a spouse's FRA benefit, things change if your spouse passes away. In that situation, Social Security spousal benefits become survivor benefits. And at that point, they're worth 100% of the benefit your spouse collected.

So let's say your spouse filed for Social Security at their FRA and got $2,400 per month in benefits. Your spousal benefit may only be $1,200. But if your spouse passes away, you should get bumped up to a $2,400 monthly payment.

Spousal benefits are eligible for a cost-of-living adjustment

There are many people who collect Social Security benefits for years. Without an annual cost-of-living adjustment (COLA), those benefits would be pretty much guaranteed to lose buying power.

The good news is that spousal benefits are eligible for a COLA each year just like regular Social Security benefits. And the same percentage that applies to regular benefits applies to spousal benefits as well.

Of course, COLAs tend to result in smaller raises on a dollar basis for spousal benefits, since spousal benefits are typically smaller than regular benefits. But those spousal benefits should get an inflation adjustment, and the same holds true if your spousal benefits are converted to survivor benefits.

Bottom line

Social Security spousal benefits could have a big impact on your retirement plan. Even though they're not always the most generous, those monthly checks could play a big role in your finances.

It's important to understand how spousal Social Security benefits work and how they differ from benefits you claim based on your own earnings record. It's also crucial to recognize how important it is to have income outside of Social Security, even if your household is eligible for a regular benefit plus a spousal benefit each month.

Supplementing your Social Security with savings, investments, or part-time work is a great way to avoid financial stress as a retiree. As you sit down to come up with a Social Security claiming strategy, consider it in the context of your broad retirement income plan so you're able to make the right decisions for your senior years.

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