3 Reasons Why Ending This Social Security Spouse Rule Can Help Increase Your Retirement Budget
For decades, a Social Security spousal rule allowed recipients to switch between their benefits and those of their spouse to receive the maximum amount. This rule is set to end this year for everyone except those who turned 70 on January 1, 2024, meaning you won’t be able to take advantage of it if you were born after January 1, 1954.
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As previously reported by GOBankingRates, under the expired rule, the higher-earning spouse would claim spousal benefits at full retirement age while the other spouse would claim their own benefits. The top earner would then transition to their benefits at age 70, maximizing the monthly Social Security payment due to delayed retirement credits, according to MarketWatch.
The lower-income spouse could also apply for a spousal benefit or keep theirs, whichever is higher. The end of the rule means you need to find other strategies to maximize your fringe benefits. But the rule could also have a different impact, like increasing your retirement budget. Here are three reasons why:
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Getting late payment benefits for a spouse
According to the Social Security Administration, if your spouse was born before January 2, 1954 and has already reached full retirement age, they can choose to receive only the spousal benefit and delay receiving their own benefit. retirement at a later date. This means that they benefit from a higher benefit.
But don’t wait too long
Normally, the longer you wait to collect Social Security retirement benefits, the larger your check. Waiting until full retirement age guarantees that you will receive the full benefits owed to you, while waiting until age 70 guarantees the maximum benefit. Just as workers face a reduction in Social Security retirement benefits if they file early — say at age 62 — those who delay their payments will see their payments increase.
However, spouses cannot benefit from the 70-year rule because their payment is capped at 50% of the main beneficiary’s full pension. Even if your spouse waited until age 70 to receive Social Security, your maximum benefit would remain at 50% of the primary beneficiary’s FRA benefit amount. In this case, your retirement budget will benefit from not waiting too long to claim.
Plan ahead
Getting the most out of Social Security spousal benefits requires discussing who should apply for benefits and when. Social Security always pays the higher of individual benefits or spousal benefits to the lower income earner. Couples wishing to apply for benefits are advised to create an online account with the Social Security Administration so that they can view their estimated benefits at different application ages.
As the SSA noted, the value of your spouse’s benefits, added to yours, can help you decide whether taking your benefits early might be more beneficial. Choosing the right ages is an essential part of retirement planning and will have a positive financial impact.
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This article originally appeared on GOBankingRates.com: 3 Reasons Why Ending This Spousal Social Security Rule Can Help You Boost Your Retirement Budget
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