Key Points
-
Claiming spousal benefits from Social Security before full retirement age could result in reduced monthly checks.
-
Once full retirement age arrives, there’s no sense in waiting.
-
Spousal benefits aren’t eligible for delayed retirement credits, and waiting too long to file could cost you a boatload of money.
There’s a lot riding on your Social Security filing decision. That’s because the age at which you take benefits has a direct impact on the amount of money you receive each month. This applies to Social Security benefits you collect in retirement based on your personal wage history as well as spousal benefits.
When you’re filing for Social Security benefits based on your own earnings record, there’s a huge upside to delaying your claim past full retirement age. But that upside doesn’t exist in the world of spousal benefits. And recognizing that could spare you from making a potentially huge mistake.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Get your spousal benefit timing right
Spousal benefits from Social Security could be a financial lifeline for you in retirement. So it’s important to file strategically.
As is the case with benefits you’re claiming on your own earnings record, you can sign up for spousal benefits starting at age 62. But if you don’t wait until full retirement age to claim spousal benefits, those monthly checks will be reduced permanently. Full retirement age is 67 for anyone born in 1960 or later.
Now when you’re claiming Social Security based on your own earnings record, there’s a huge incentive to hold off past full retirement age. Each year you wait up until age 70 boosts your monthly checks by 8%.
But those delayed retirement credits don’t apply to spousal benefits. Rather, spousal benefits max out at 50% of what your spouse is entitled to at their full retirement age. And you can collect those checks in full as long as you wait until your full retirement age to file.
But waiting to claim spousal benefits beyond full retirement age won’t put more money in your pocket. If anything, it could put many thousands of dollars less in your pocket, since you could conceivably go months or years without collecting the money you’re entitled to.
Don’t let confusion lead you to a bad decision
It’s important to try to maximize Social Security, no matter which type of benefit you’re entitled to. But it’s crucial to read up on how spousal benefits work so you don’t file at the wrong time over a misunderstanding.
In addition to reading up on how spousal benefits work, it’s also a good idea to understand the difference between spousal and survival benefits, since the two are related. Arming yourself with that knowledge could lead to savvy decisions and smart budgeting at various stages of retirement.
The $23,760 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Join Stock Advisor to learn more about these strategies.
The Motley Fool has a disclosure policy.
