3 things every retired couple should know

Nearly 1.9 million workers applied for spousal Social Security benefits in March 2024, with an average check of $912 per month. That’s just under $11,000 in annual benefits. It’s not an insignificant amount, but you might be able to do much better.

Understanding a few key rules could help you maximize your Social Security spousal benefits, so you can enjoy a more comfortable retirement. Here are the three most important things to understand.

1. Timing is everything

When it comes to Social Security benefits, it’s all about Full Retirement Age (FRA). The following table may help you find yours:

Source: Social Security Administration.

You are entitled to your maximum Social Security spousal benefit from your FRA. That’s worth half of your partner’s Social Security benefits from their FRA. For example, if your partner is entitled to a $2,000 monthly benefit in their FRA, your maximum spousal benefit would be $1,000. But you might get less than that.

You are allowed to claim Social Security starting at age 62, but it reduces your checks. When you apply for spousal benefits, you lose 25/36 of 1% per month for up to 36 months of early claiming. This represents a reduction of 8.33% per year.

If you claim even earlier, you will lose an additional 5/12 of 1% per month. So those who apply immediately at age 62 reduce their checks by 30 to 35 percent, depending on their FRA. If you qualify for a $1,000 spousal benefit from your FRA, claiming at age 62 would reduce your monthly checks by $650 to $700 per month.

This is not always the wrong choice, however. Claiming early is often the right option for those with a short life expectancy and those who can’t pay their bills without Social Security. But when none of these things apply, delaying Social Security will likely net you a larger lifetime benefit. Don’t wait beyond your FRA. Your spousal benefit checks will no longer increase after this point.

2. You might not get spousal benefits – and that might be a good thing

Dual eligible spouses are those who earned a Social Security retirement benefit based on their own work history and who are also eligible for a spousal benefit through their marriage to an eligible worker. The Social Security Administration automatically awards these spouses the greater of their retirement or spousal benefit.

You can apply for your retirement benefit any time after age 62, but you can only apply for a Social Security spousal benefit after your spouse applies. Unlike spousal benefits, which cap at your FRA, retirement benefits continue to grow until you reach age 70. At this age, you will be entitled to a benefit which represents 124 to 132% of what you would have obtained at your FRA.

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Couples can leverage this knowledge to maximize their household benefits when both are dual eligible. If both have earned similar amounts over their careers, it often makes sense for each to delay Social Security — barring health or financial problems — so that each can maximize their retirement benefits.

Where one person has earned significantly more than the other, it might be better for the person earning less to claim their retirement pension earlier. The money that raises could allow higher-income people to wait until they qualify for larger checks. Then, when the higher earner applies for Social Security, the Social Security Administration will automatically switch the lower earner to a spousal benefit if it is worth more than he already receives.

3. Changes to your marital status could cost you your spousal benefits

You guarantee your eligibility for Social Security retirement benefits by earning 40 work credits throughout your career (one credit is defined as $1,730 in 2024), and you can earn a maximum of four credits per year. Once you’ve done that, you’re guaranteed some sort of check in retirement. However, this is not the case for spousal benefits.

You are eligible for spousal benefits if you are married to a worker who earned a retirement benefit. You can also benefit from your ex’s work record provided you have been married for at least 10 years and have not remarried since. It doesn’t matter if your ex remarried.

But if you divorce before reaching the 10-year mark or remarry at any time, you will lose your Social Security spousal benefits. If you remarry, you would be eligible for a spousal benefit on your new partner’s employment record, provided they are eligible for a retirement benefit.

In the event of a change in marital status, it is best to take the time to review your social security application strategy, with your partner if necessary. Decide on a new Social Security claiming age so you can get the most out of the program.

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Spousal Social Security Benefits: 3 Things Every Retired Couple Should Know was originally published by The Motley Fool