For married individuals, comprehending the distinctions between retired-worker benefits and spousal benefits under Social Security is essential. MassMutual’s recent survey on Social Security uncovered a prevalent misconception: nearly one-third of those nearing retirement wrongly believed that a spouse without individual earnings cannot receive benefits from their partner’s record.
In fact, a spouse is indeed eligible for Social Security benefits based on their partner’s work history. It’s crucial for couples in 2024 to be aware of several key differences between spousal and retired-worker benefits. Here are four critical points to consider.
Social Security: Understanding the Differences for Couples
The amount a spouse receives from Social Security is dependent on two factors: the age at which they claim the benefit and the retired worker’s lifetime earnings. If a spouse chooses to receive benefits based on their partner’s record, they are entitled to 50% of their partner’s primary insurance amount (PIA), which is determined by the retired worker’s earnings and the age they claim Social Security.
It’s important to understand that the age at which the spouse claims benefits is a significant factor. Eligibility starts at 62, but claiming benefits before reaching full retirement age results in a reduced amount, less than the 50% mark of their partner’s PIA.
Timing and Maximization of Benefits
The reduction in spousal benefits depends on the timing of the claim. Notably, there is no increase in spousal benefits if they are claimed after reaching full retirement age. This contrasts with retired-worker benefits, where delayed retirement credits can increase the amount if the worker defers claiming Social Security past their FRA.
Retired workers can enhance their benefits by 8% per year up to age 70 by delaying their Social Security claim. However, for spousal benefits, delaying beyond the FRA offers no financial incentive.
A critical condition for spousal benefits is that they are only available when the retired partner is already receiving Social Security. While eligibility for spouses starts at 62, they cannot claim benefits based on their partner’s record until the partner begins to receive retirement benefits. This rule can create complex scenarios, especially if a retired worker chooses to delay their benefits.
Spouses are entitled to the higher of their own retired-worker benefit or the spousal benefit. However, it’s not possible to claim spousal benefits while waiting for one’s own retired-worker benefit to increase through delayed retirement credits. When a spouse applies for Social Security, they are considered for both types of benefits and will receive the higher amount.