Knowing these rules will help you decide whether claiming spousal benefits is right for you.
Think tank proposes capping Social Security benefits at $100,000
A Washington think tank has proposed capping annual Social Security benefits for married couples at $100,000 as a way to reduce a looming deficit in retirement trust funds.
Because many of an individual’s Social Security benefits depend on their earning history, spousal benefits allow people with short or unstable work histories to still receive some benefit from the program.
When you claim Social Security spousal benefits, you may be eligible to receive up to 50% of your primary claiming spouse’s primary insurance amount (the amount of your monthly benefit if you claimed at full retirement age). It may not be the best option for all married retirees, but it’s a strategy worth considering.
If you’re wondering whether you should receive spousal benefits, here are three things you should know beforehand.
1. Who is eligible to receive spousal benefits?
To qualify for Social Security spousal benefits, you must check three main boxes:
- The spouse making the primary claim must be currently receiving benefits.
- Must have been married for at least one year.
- You must be at least 62 years old and raising a child under 16 or with a disability that began before age 22.
If all three conditions are true, you are eligible to receive spousal benefits. If you do not meet all three, you will be disqualified.
2. How early claims for spousal benefits affect monthly benefits
Similar to standard benefits, the Social Security Administration will reduce your monthly spousal benefit based on when you claim before your full retirement age. How different is it?
If you claim your standard benefit before reaching full retirement age, your benefit will be reduced by 5/9 of 1% per month for the first 36 months. If you claim your spousal benefit early, your benefit will be reduced by 25/36 of 1% for the first 36 months, resulting in an annual reduction of approximately 8.33%. For each additional month you claim benefits before reaching full retirement age, both your standard benefit and your spousal benefit will be reduced by an additional 5/12 of 1%.
If your full retirement age is 67 (for those born after 1960) and you claim spousal benefits at age 64, your benefits will be reduced by 25% (20% for standard benefits). If you claim spousal benefit at age 62, your spousal benefit will be reduced by 35% (compared to 30% for standard benefits). Unlike standard benefits, spousal benefits do not increase if you delay past retirement age.
3. Divorced people can also qualify for spousal benefits.
Divorced people can also claim Social Security spousal benefits as long as:
- You were married for at least 10 years.
- You have not remarried.
- Divorced for at least two consecutive years (applies only if ex-spouse is eligible but has not yet applied for benefits)
To be eligible for standard spousal benefits, the primary claiming spouse must be currently receiving benefits, but the same does not apply to divorced claims. If you are 62 or older, you can make a claim at any time as long as you check the box above.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
