Marriage changes the game when it comes to retirement planning. You now have to accommodate two people’s visions of the future, and that can require some compromise. But you may also have another person to help you save for those goals.
You’ll likely have the benefit of two Social Security checks, too. If you want those checks to go as far as possible, there are three key things you need to understand before you apply for the program.
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1. How the government calculates Social Security spousal benefits
You’re eligible for Social Security spousal benefits if your partner is eligible for retirement benefits. Your maximum spousal benefit is one-half of what your partner qualifies for at their full retirement age (FRA). This is 67 for most workers today.
For example, if your partner qualifies for a $2,000 monthly benefit at their FRA of 67, then you’d qualify for a $1,000 monthly spousal benefit at your FRA. But just because you’re eligible for a spousal benefit doesn’t mean you’ll always get one.
If you qualify for retirement benefits in your own right and your retirement benefit is larger than your spousal benefit, the Social Security Administration will give you your own benefit instead. It’s also worth noting that you cannot claim a spousal Social Security benefit until your partner applies for checks.
2. How your claiming age affects your Social Security benefits
As mentioned above, everyone has an FRA, which is the age you become eligible for your full Social Security benefit per check. You can apply earlier or later than this and the government will adjust your benefit accordingly. But the rules are different for each type of benefit.
With retirement benefits, you shrink your checks by 5/9 of 1% per month for up to 36 months of early claiming, then 5/12 of 1% per month thereafter. If you apply right away at 62, you’ll get 30% less per check than you would have if you’d waited until your FRA. You can also delay benefits past your FRA and they’ll grow by 2/3 of 1% per month until you qualify for your maximum benefit at 70.
Spousal benefits also have an early claiming penalty, but it’s steeper than the penalty for retirement benefits. Spousal benefits shrink by 25/36 of 1% per month for the first 36 months before dropping to 5/12 of 1% per month thereafter. So a spouse claiming benefits at 62 with an FRA of 67 would reduce their checks by 35%. There’s also no benefit to delaying spousal Social Security past your FRA.
Finally, there are survivors benefits. These are the benefits you receive after your spouse passes away if they’re larger than your own retirement benefit. Your survivors benefit could be up to 100% of what your partner was receiving (or eligible for) at the time of their death. This means that claiming retirement benefits early also permanently reduces the survivors benefit your partner is eligible for after you’re gone. For this reason, you may prefer to wait to delay your Social Security application if you don’t need the money right away.
3. How ex-spousal Social Security benefits work
No one wants to think about their marriage ending, but it happens to some couples. Divorce doesn’t always prevent you from claiming a spousal benefit, though. If you were married for at least 10 years before divorcing, you may still be entitled to a spousal benefit on your ex-partner’s work record if you have not remarried.
It doesn’t matter if your ex has remarried. Claiming an ex-spousal benefit will not affect your ex’s new spouse from claiming a spousal benefit either.
Another interesting rule about ex-spousal benefits is that you don’t have to wait until your ex has started receiving benefits to apply like current spouses do. As long as you’ve been divorced for at least two years, you can claim as soon as you turn 62 or at any point after that.
Maximizing your household benefit
The key to maximizing your household Social Security benefit is open communication with your spouse. Talk about the pros and cons of various claiming ages and determine when each person plans to claim. It’s OK if this plan changes down the road. Just be sure to communicate this to your partner.
Think about your life expectancies and your financial situations when choosing the best claiming ages. Short life expectancies and a lack of personal savings favor claiming early. But if you live into your 80s or beyond and can afford to delay, you may get a larger lifetime benefit by waiting until at least your FRA to apply.
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