For married couples, navigating the complexities of Social Security can be a significant part of retirement planning. While many understand their individual benefits, the rules surrounding spousal benefits often remain a mystery. Understanding these provisions is crucial for maximizing your household’s retirement income. As a certified financial planner (CFP) and fiduciary, I, Scott Brooks, a fee-only financial advisor and registered investment advisor (RIA) at Brooks Wealth Management, am here to shed light on this important topic. Our firm, a proud member of the XYPN and Fee-Only Network, is dedicated to helping clients across all 50 states make informed financial decisions.

What Are Social Security Spousal Benefits?

Social Security spousal benefits allow an eligible spouse to receive benefits based on their partner’s work record, rather than their own. This provision is particularly valuable for couples where one spouse has a significantly lower earnings history, or perhaps no earnings history at all, due to various life circumstances such as raising a family. The primary goal of spousal benefits is to provide a safety net and ensure both partners have a foundational income in retirement.

Eligibility Requirements for Spousal Benefits

To qualify for spousal benefits, several conditions must be met:

• You must be at least 62 years old, unless you are caring for a qualifying child (under 16 or disabled) of the primary worker [1].
• Your spouse must have already filed for their own Social Security retirement or disability benefits [1].
• You must have been married for at least one continuous year to the primary worker [2].

It is important to note that if you are eligible for your own Social Security retirement benefit, the Social Security Administration (SSA) will pay you your own benefit first. If your spousal benefit amount is higher than your own, you will receive a combination of benefits that equals the higher spousal amount [1]. You cannot receive both benefits in full simultaneously.

How Spousal Benefits Are Calculated

The maximum spousal benefit you can receive is up to 50% of your spouse’s Primary Insurance Amount (PIA) at their Full Retirement Age (FRA) [3]. Your PIA is the amount your own Social Security benefit would be if you started collecting at your FRA. The exact percentage you receive depends on your age when you begin claiming spousal benefits.

Impact of Claiming Age on Spousal Benefits

If you claim spousal benefits before your own Full Retirement Age, your benefits will be permanently reduced. For example, if your FRA is 67, claiming at age 62 could reduce your spousal benefit to as little as 32.5% of your spouse’s PIA [1]. The reduction is calculated based on the number of months you claim before your FRA. There is no advantage to delaying spousal benefits past your own FRA, as they do not accrue delayed retirement credits like individual benefits do [3].

Key Claiming Strategies for Married Couples

Strategic claiming can significantly impact the total lifetime benefits a married couple receives. Before 2016, strategies like “file and suspend” and “restricted application” offered more flexibility, but these have largely been eliminated for those born after January 1, 1954 [2]. However, careful planning is still essential.

Understanding the Changes Post-2016

The Bipartisan Budget Act of 2015 brought significant changes to Social Security claiming rules. For individuals who turned 62 on or after January 2, 2016, the “deemed filing” rule applies. This means that when you file for either your retirement benefit or your spousal benefit, you are generally considered to have filed for both, and you will receive the higher of the two amounts [2]. The “file and suspend” strategy, which allowed a higher earner to file for benefits and immediately suspend them to allow a spouse to claim spousal benefits while their own benefit grew, was eliminated for most individuals after April 30, 2016 [2].

Strategies for Today’s Married Couples

Despite these changes, married couples still have important decisions to make. A key consideration is coordinating when each spouse claims their benefits. For many couples, especially those with a significant difference in earnings, it often makes sense for the higher-earning spouse to delay claiming their own benefits until age 70. This maximizes their own benefit, which in turn maximizes the potential survivor benefit for the lower-earning spouse [3].

The lower-earning spouse can then claim their own benefit or a spousal benefit, whichever is higher, at their Full Retirement Age. This approach ensures the highest possible income stream for the couple throughout retirement and provides a larger benefit for the surviving spouse should one pass away. As a fiduciary, my role as a certified financial planner is to help you analyze these scenarios and determine the optimal strategy for your unique situation.

Divorced Spousal Benefits

It is also important to understand that spousal benefits can extend to divorced individuals. If you were married for at least 10 years, are currently unmarried, and are at least 62 years old, you may be eligible to collect benefits on your ex-spouse’s record [4]. Your ex-spouse must be eligible for Social Security benefits, but does not necessarily need to be collecting them for you to claim if you have been divorced for at least two years [4]. This can be a critical source of income for many individuals and is a topic I frequently discuss with clients at Brooks Wealth Management, your trusted registered investment advisor.

The Importance of Professional Guidance

Social Security rules are complex and constantly evolving. Making the right claiming decisions can significantly impact your financial well-being throughout retirement. Working with a qualified professional, such as a fee-only financial advisor, can help you navigate these intricacies. A CFP who operates under a fiduciary standard, like those at our fee-only network firm, will always act in your best interest, providing unbiased advice tailored to your specific goals.

At Brooks Wealth Management, we specialize in helping individuals and couples develop comprehensive retirement income strategies that integrate Social Security with other assets. Our goal is to ensure you make the most informed decisions to secure your financial future.

Ready to Optimize Your Social Security Strategy?

Understanding Social Security spousal benefits is just one piece of your overall retirement puzzle. If you are a married couple looking to maximize your Social Security income and create a robust retirement plan, we invite you to connect with us. Book a free consultation with a certified financial planner at Brooks Wealth Management today to discuss your unique situation and explore strategies tailored to your needs. Visit our contact page at /contact/ to schedule your complimentary session.

References:

• [1] Social Security Administration. “Benefits for Spouses.” https://www.ssa.gov/oact/quickcalc/spouse.html
• [2] Social Security Administration. “Filing Rules for Retirement and Spouses Benefits.” https://www.ssa.gov/benefits/retirement/planner/claiming.html
• [3] Hartford Funds. “Spousal Benefits: An Often Overlooked Key to Maximizing Social Security Benefits for Couples.” https://www.hartfordfunds.com/practice-management/client-conversations/financial-planning/an-often-overlooked-key-to-maximizing-social-security-benefits-for-couples.html
• [4] WISER Women. “Social Security Spousal Benefits.” https://wiserwomen.org/resources/social-security-resources/social-security-spousal-benefits/