If you have been married in the past, you are currently married, or you might marry in the future, Social Security spousal benefits matter.
A short story to start off the lesson: Jane, 70, is currently collecting a $3,500 monthly Social Security check based on her deceased ex-husband’s earning history. Jane was married to Larry for 12 years. She never remarried and personally has a limited earnings history. Four years ago, when Jane was 66, she applied for her Social Security check which amounted to $1,100/month on her earnings record. Jane was also eligible for a spousal benefit of $1,600 based on Larry’s earning record. She could claim Larry’s benefit because she was married to Larry for over 10 years and did not remarry before age 60. The $1,600 benefit is in lieu of her $1,100 benefit. Larry’s second wife was also collecting a spousal benefit. Larry died a couple of years ago and both Jane and Larry’s widow are now collecting Larry’s full Social Security check of $3,500.
Jane collected on Larry’s earning history because she did not have a strong earnings history of her own, either because she missed years of earning or had lower earning years. If both spouses have strong earning histories, spousal benefits are not important because you will both claim on your own record. Spousal benefits are really important for individuals who do not have a strong earnings history due to being out of the workforce for various reasons.
Social Security Benefits for Current Spouses
There are a lot of moving parts in this example, so we will break it down. First, lets go over how to qualify for your current spouse’s benefit. You must be married for at least one year to collect on a current spouse. To claim on your current spouse’s record, your spouse has to file for their benefit before you are allowed to. There used to be a strategy called “file and suspend” that would allow spouses to get around this rule, but this is no longer available.
The amount you receive when you claim spousal benefits is half of what the working spouse will receive at FRA, or full retirement age. If you claim your benefit before your FRA, your check will be reduced. If the check you will receive on your own earnings record is larger than this spousal benefit, Social Security will make you take the larger check. If it is not larger, you will receive the spousal benefit.
Social Security Benefits for Divorcees
How about if you are divorced? The big rule here is that you must have been married for 10 years and cannot be remarried, though your ex-spouse can be remarried. If you do remarry, there is a possibility you can collect on your first spouse’s record if your second marriage is ended by annulment, divorce, or death before you claim Social Security.
Unlike with a current spouse, your ex-spouse does not have to file for their benefit for you to collect. Like with a current spouse, you can only file for this spousal benefit if it is greater than what you would receive collecting on your own earnings record.
Collecting on your ex-spouse’s record does not affect their benefit or any other spouse collecting on their record. If you are collecting on an ex-spouse and they die, you then get their full benefit, just like in Jane’s story. If multiple people are collecting on the deceased persons benefits, they will all receive the full benefit.
Social Security Benefits for Widows/Widowers
Lastly we will go over how to collect benefits if you are widowed. You must be married for 9 months to collect widow benefits and cannot remarry before age 60. Unlike with any other situation, widow benefits allow you to collect checks as early as age 60, though these checks will be a reduced amount. There is a possibility of starting widow benefits at age 60, and then turning on your own check once you reach any age from 62 to your full retirement age, but that gets more complicated.
If you are widowed after you and your spouse have elected to take checks, you will receive the larger check and lose the smaller one. For example, like in Jane’s story, Larry’s widow stopped getting her $1,600 benefit and instead received Larry’s $3,500 check.
There are a lot of intricacies and exceptions to the rules that we have not discussed above. A lot of people think Social Security is easy, and it can seem like that, but it can become really complex, especially if you want to maximize the benefits you receive. Make sure you consult someone who can go through all the options and scenarios with you, not just someone who tells you to take it as soon as you can or as late as you can. At Cardinal, we help people with Social Security timing, going over the best options for their unique situation. We can help you too.