Social Security Spousal Benefits: Three Important Considerations for Retirees

Chicago, Illinois: Social Security has long been a crucial program for providing income to millions of Americans in their retirement. While it is typically tied to individuals who have worked and paid taxes, it also offers spousal benefits to support non-working or low-earning spouses. Here are three important considerations for couples nearing or in retirement when it comes to Social Security spousal benefits.

First and foremost, Social Security calculates a recipient’s monthly benefits using a specific formula based on their 35 highest-earning years of income. However, a spouse can receive benefits based on their partner’s earning record if they meet certain age or caregiving criteria. This means that at full retirement age, the spouse is eligible to receive 50% of their partner’s primary insurance amount.

It’s important for couples to consider the impact of claiming benefits early or late, as it directly affects the amount they receive. Claiming benefits early reduces the payout, while delaying increases it. This applies to both the individual’s own benefits as well as the spousal benefits.

Furthermore, in the unfortunate event of a spouse passing away, Social Security spousal and survivors benefits become crucial. If a spouse is claiming spousal benefits when their partner passes away, Social Security will convert those benefits to survivors benefits, making them eligible to receive up to 100% of their deceased spouse’s benefit.

It’s worth noting that individuals cannot simultaneously receive spousal and survivors benefits, only the higher of the two. As spousal benefits max out at 50% of the partner’s primary insurance amount, survivors benefits are typically the higher-paying option. Therefore, understanding these nuances and implications can significantly impact a couple’s financial planning and security in retirement.