Social Security spousal benefits explained

I’ve received numerous questions from InvestmentNews readers about Social Security spousal benefits. There also seems to be a lot of confusion regarding the difference between spousal benefits, when one’s mate is alive, and survivor benefits after one’s spouse dies.

So it seems like a good time to review the who, what, when and how much of Social Security spousal benefits and the different rules — and benefit amounts — for spouses versus survivors.

A spouse who hasn't worked long enough — at least 10 years — to qualify for his or her own retirement benefit may still be eligible for spousal benefits. A spousal benefit is worth up to 50% of the working spouse’s full retirement age benefit amount. To collect spousal benefits, the couple must be married at least one year, and the working spouse must claim Social Security retirement benefits to trigger spousal benefits for the other spouse. Different rules apply to divorced spouses.

Today, many spouses are entitled to their own retirement benefit. In addition, they may be eligible for a spousal benefit. Traditionally, if an individual's benefit as a spouse is higher, they will get an additional amount so that the combination of benefits equals that higher amount

People who were born before 1954 may be eligible to claim a spousal benefit first and switch to their own maximum retirement benefit at 70. The last eligible group of people who can use this switch strategy turn 70 in 2023. All others who were born in 1954 or later don’t get a choice. Whenever they file for Social Security, they will be paid the highest benefit to which they are entitled at that age, whether on their own earnings record or as a spouse.

One adviser, Charlie, asked about an optimum Social Security claiming strategy for his clients Linda and Rick.

Linda reaches her full retirement age next month and is eligible for a $1,100 monthly benefit. Her higher-earning husband, Rick, reaches his full retirement age six months later in March, when he will be eligible for $3,300 monthly benefit.

Charlie asked: Can Linda start drawing her $1,100 benefit next month and then switch to the higher spousal benefit of $1,650 — half of Rick’s full retirement age benefit of $3,300 — next March?

Yes, I responded. If Linda claims Social Security at her full retirement age, she will automatically step up to a higher spousal benefit amount once her husband claims his Social Security.

Another adviser, Kyle, asked what happens if a wife who's not eligible for her own retirement benefit collects reduced spousal benefits early. Does an early claiming decision lock in that reduced amount for the rest of her life? And what happens if her husband dies first? Does her spousal benefit stay the same because she claimed early?

If the wife isn't eligible for her own Social Security retirement benefit, she would be entitled to a spousal benefit once her husband claims his Social Security, I responded. But if she claims her spousal benefit before her full retirement age, it would be worth less than half of her husband’s full retirement age benefit amount. The earliest age she can claim spousal benefits is 62, and the amount is permanently reduced.

But if the husband dies first, she would no longer be a spouse. She would be a survivor. Even though her spousal benefits are permanently reduced if she claims before her full retirement age, her early claiming decision will have no impact on her survivor benefits if she is at least full retirement age when she collects them.

Survivor benefits are worth 100% of what her late husband was collecting when he died, or what he would have been entitled to at the time of his death if he died before claiming benefits. That assumes his wife is at least full retirement age when she collects her widow’s benefit.

Survivor benefits are available as early as age 60, compared to 62 for retirement benefits, but the amount is reduced to as little as 71.5% of the late worker’s benefit amount if the survivor claims before full retirement age. Once the widow steps up to the larger survivor benefit, her smaller spousal benefit would disappear.

[More: When can a widow collect her husband's social security?]

There are a few other important points about survivor benefits. If a wife is collecting spousal benefits on her husband’s record and he dies first, she will automatically step up to the larger survivor benefit — even if she is not yet full retirement age — meaning she would be forced to accept a smaller benefit.

But if a spouse is collecting her own retirement benefit when her husband dies, she can choose when to start her survivor benefit. A survivor benefit is worth the maximum amount if collected at the survivor’s full retirement age. Unlike retirement benefits, survivor benefits do not continue to grow by 8% per year if postponed beyond full retirement age up until age 70.

Finally, if a spouse is entitled to his or her own retirement benefit and hasn't yet claimed Social Security when a mate dies, he or she can choose which benefit to claim first and switch to the other larger benefit later.

(Questions about new Social Security rules? Find the answers in Mary Beth Franklin’s new 2022 ebook at MaximizingSocialSecurityBenefits.com)