I’ve had many conversations with families about the details of Social Security spousal benefits. The rules can be confusing, and the benefit of getting the decision right, such as when and how to file for Social Security spousal benefits, can make a significant impact on your lifetime Social Security benefit.

In this article I’ll take a closer look at this important aspect of Social Security. It impacts most of my clients’ decisions around Social Security, and may benefit yours as well.

[Editor’s Note: My source material for this post comes mostly from an excellent book I would highly recommend called Social Security Made Simple, by Mike Piper. I highly recommend it.)

What are Social Security spousal benefits?

Social Security spousal benefits are a retirement benefit available to spouses who have in most cases not had a long work history. Most often this person is someone who was not the sole breadwinner of the family. As early as age 62, this “non-working” spouse is eligible for a Social Security spousal benefit.

The spousal benefit is typically 50% of the earner’s benefit amount. While the non-working spouse can claim their benefit as early as age 62, their spousal benefit cannot start until the working spouse has started their benefit.

Example: Joe and Pam are married. Joe is 65 and has not started his benefit. Joe has been the primary earner in the family. Pam is 62 and has spent most of her years raising their children and not earning a wage. Pam is technically eligible to start her spousal benefit, but since Joe has not started receiving his Social Security benefit, Pam is unable to start receiving her spousal benefit.

If Joe precedes Pam in death, Pam’s benefit will increase to the amount Joe was receiving and Pam’s benefit will stop. If Pam precedes Joe in death, Joe’s benefit will remain and Pam’s will stop.

How do Social Security spousal benefits change based on your filing date?

When the non-working spouse waits until her full retirement age to start her spousal benefit, her benefit will equal 50% of the earner’s benefit (once he decides to file). By having the working spouse delay filing for Social Security, not only does his benefit increase, but the spousal benefit increases as well. This increase can continue up until the earner reaches their full retirement age.

Example: Joe is 65 and is contemplating starting his Social Security benefit. His benefit amount at age 65 is $2,000. Joe can file for his benefit at any time, but if he waits until his full retirement age of 67, his benefit will increase to $2,300. If Pam also waits to claim her spousal benefit until her full retirement age, her benefit will be 50% of Joe’s, or $1,150.

What if Joe files at age 65 and Pam files for her spousal benefit at age 62? Is Pam’s benefit still 50% of Joe’s $2,000 benefit?

It is not. Since Pam does not wait until her full retirement age of 67 to file, her spousal benefit is permanently reduced. The Social Security Administration has a table to help people calculate what the penalty will be, shown below:

So if Pam files for her spousal benefit at age 62 and Joe’s benefit is $2,000, Pam’s spousal benefit will be calculated as follows:

$2,000 x 65% x 50% = $650

That’s quite a reduction from the 50% some spouses may expect!

Can you receive a Social Security spousal benefit and an earned benefit?

If you have some work history but not more than your spouse, you can claim your own earned benefit as well as a spousal benefit if it makes sense to do so.

Example: Assume Pam stayed at home to raise their children, but she had a home business and has an earned Social Security benefit of $500 if she files at age 62. This is still less than Joe’s benefit of $2,300 at his full retirement age so Pam should plan to claim her Social Security spousal benefit, but since she cannot claim her spousal benefit until Joe files for his benefit, Pam can start her own earned benefit ahead of time. Pam could start her $500 benefit today, and when Joe files for his she could then file for her spousal benefit at which time her total benefit is increased to be closer to 50% of Joe’s.

Once Pam files for her spousal benefit, her total monthly benefit will be a calculation of one part earned benefit, and another part spousal benefit.

The Social Security Administration is not lacking in exceptions and caveats, and this scenario is no different. If the spouse files for their own earned benefit before their full retirement age then that portion of their benefit results in a permanent reduction, based on the same table shown earlier.

Example: Pam’s earned benefit at full retirement age is $750. Instead of waiting until her full retirement age to start this benefit, she decides to claim it early at age 62 and then start her spousal benefit once her husband files for his benefit. Since Pam is claiming her earned benefit 5 years before her full retirement age, once her spousal benefit finally begins it will be $887, based on the following calculation:

Pam’s earned benefit of $487 calculated as $750 x 65% (since she’s claiming 5 years early), plus
Pam’s spousal benefit of $400 calculated as 50% x $2,300 - $750

Pam has in effect been penalized for claiming her own earned benefit early, and that penalty has carried over to her spousal benefit as well. How is this to be avoided? She can claim her earned benefit later than age 62, which reduces her penalty with each year she gets closer to her full retirement age. Of course, claiming later means that Pam and Joe have less monthly income, in exchange for a higher check later.

What’s the best way to maximize our Social Security family benefits when it comes to spousal benefits? I’ll explore this in a future Social Security blog post.