Are You Receiving Your Full Spousal Social Security Benefit? #306

Retirement Income

May 19

Are you getting your full entitlement, spousal Social Security, or—like one of my recent clients—missing out on hundreds, even thousands, of dollars each year? This week, I discuss how spousal benefits work, what the eligibility requirements are, and the critical steps you need to take to ensure you aren't leaving money on the table. If you or your spouse are nearing retirement or already collecting benefits, this episode will equip you with the knowledge to maximize your Social Security income and avoid common mistakes.

You will want to hear this episode if you are interested in...

[00:00] Spousal social security benefits
[01:56] Criteria for receiving spousal benefit
[02:25] Calculation of spousal social security benefit
[07:26] Confusion when both spouses are eligible for their own and spousal benefits
[09:46] Sue's social security increase
[11:24] Misconception that adjustments are automatic

Understanding Spousal Social Security Benefits

If you are married (or divorced after a marriage of at least 10 years), you may qualify for spousal Social Security benefits. For those with limited earning histories or lower primary insurance amounts (PIA), this benefit is especially valuable.

At your full retirement age (FRA)—which is 67 if you were born in 1960 or later—you can collect up to 50% of your spouse’s full retirement benefit, so long as your own benefit is less than half of theirs. If your own benefit exceeds half your spouse’s, you'll receive your own larger benefit. Social Security will always pay the higher of the two benefits, but not both combined. This makes it vital to understand where you fall before claiming.

How Early Claiming Reduces Your Benefit

Timing is critical. Claiming spousal benefits before your FRA means your payments will be permanently reduced. The reductions work as follows:

For the first 36 months before your FRA, your benefit is reduced by 25/36 of 1% for every month claimed early.
Additional months over 36 are reduced by 5/12 of 1% per month.

For example, if a spousal benefit of $800 is claimed 36 months early, the amount drops to $600, a 25% reduction. If claimed 60 months early (at age 62), the benefit falls by roughly 35% to $520.

Key Rules of Spousal Benefit Eligibility

To receive a spousal benefit, several conditions must be met:

Your spouse must be collecting their Social Security benefit (unless you’re claiming divorced benefits, in which case your ex only needs to be eligible).
You must be at least age 62 (or have a qualifying child under 16 or with a disability in your care).
Generally, you need to be married for at least one year before applying, though this rule doesn’t apply if you’re the parent of your spouse’s child.
If divorced, you must have been married for at least 10 years.

Spousal benefits do not increase if you wait past your full retirement age to claim. The maximum is always 50% of your spouse’s PIA. Delaying only increases benefits on your own work record, not on a spousal claim.

Spousal Benefits Are Not Automatic

One major pitfall couples face is assuming that spousal benefits “switch on” automatically when their higher-earning spouse starts collecting their benefit. In reality, the Social Security Administration often needs to be contacted directly to initiate the higher spousal benefit.

I share a case where a client (Sue) was entitled to a much larger benefit once her husband began taking Social Security at age 70, yet her benefit wasn’t increased until she contacted Social Security, resulting in a missed $900/month for six months. Social Security would only issue six months of retroactive pay, meaning the client lost out on another six months of increased income. Don’t assume the system will identify and correct missed benefits for you—it’s up to you (and your advisor) to ensure you’re receiving everything you’ve earned.