Determining when to collect Social Security benefits is tough, and to make matters a bit more complex, you must consider Social Security spousal benefits. Social Security spousal benefits can positively impact the lower income earner — whether currently married or divorced (under specific circumstances).
So why bother learning about spousal benefits? For starters, if you don’t qualify for your own Social Security benefits, you don’t want to miss out on a possible spousal benefit to help supplement your retirement income. If you qualify for spousal benefits and your own benefits, you’ll want to select the higher options, naturally. Although you may qualify for both, you do have to select one, there is no double dipping.
A common scenario for pursuing spousal benefits is when one spouse has not earned enough credits to qualify for social security. People leave the workforce for various reasons, and spousal benefits can help supplement your retirement income whether your benefit is significantly smaller than your spouses or you simply don’t qualify.
Who gets spousal Social Security benefits and when can they begin collecting?
As a refresher, an individual must earn 40 work credits to qualify for Social Security. A credit is tallied for each quarter you work, equating to 10 working years. Those with less than 40 work credits have the possibility of receiving a benefit based on their spouse's (or ex-spouse's) wages.
Those collecting spousal benefits can expect to receive up to half of the amount of the spouse's monthly benefit. Meaning, if your spouse’s Social Security payment is $1,600, the max you could receive in spousal benefits would be $800 per month. Collecting spousal benefits does not have any impact on the other person’s benefits. Nobody's benefits are reduced when spousal benefits are paid out.
Age 62 is when an individual is eligible to begin collecting Social Security — whether it is their own benefits or spousal benefits. It’s important to note, nobody receives more than one monthly payment from Social Security. You may qualify for both your own benefits and spousal benefits, but you will ultimately select the larger of the two.
How does a divorce impact spousal Social Security benefits?
If you were married for a minimum of 10 years, you qualify for spousal Social Security benefits as long as you are not remarried when it comes time to collect the benefit.
Let’s use Jim and Mary as an example who were married for 11 years before their divorce. Throughout their working careers, Jim was the higher-income earner. When Mary turns 62, she becomes eligible to collect Social Security. Although Mary does qualify for her own Social Security benefit, her benefit is rather small because she left the workforce for several years when their children were young.
Mary never remarried and learns that her spousal benefit would be larger than her own benefit. She naturally chose to collect spousal Social Security benefits. Regardless of which options Mary would have selected, Jim’s Social Security payment is not impacted.
Jim eventually remarried. Jim’s new wife also has the option to collect spousal benefits. Both women could potentially qualify to collect spousal benefits based on Jim's record without impacting each other's benefits. Should Mary remarry, her spousal benefits would likely stop.
If one spouse dies, how are Social Security benefits impacted?
Social Security survivor benefits come into play when a person dies. Survivor benefits are paid to widows, widowers, and dependent children of the individual that passed away.
If you are collecting spousal benefits and your spouse or ex-spouse dies, your spousal benefits turn into survivor benefits. Social Security benefits are for life and you do not have to worry about your benefit ending when you’re receiving benefits on another person’s record who dies. Keep in mind, there are exclusions if you remarry.
Understanding Your Social Security Benefit
Knowledge is a key component in understanding your Social Security benefit. While the Social Security Administration website is a great resource, it’s often helpful to talk through your specific scenario to ensure you’re not missing out on your full benefits potential.
Is it time to learn more about your Social Security benefit and how that monthly payment plays into you reaching your retirement goals? Reach out to Integrated Wealth Management to learn more about our personalized retirement planning services.
About Integrated Wealth Management
Integrated Wealth Management is owned by Burt Hutchinson, CPA, CFP®. We’re a CPA-led organization, meaning we’re here to handle your complex tax scenarios and provide cost-saving insight related to your financial plan.
We’re here to guide you through the 3 stages of retirement:
Uncertainty Stage: When you are within 10 years of retirement and have questions about how to make it work
Stability Stage: When you have reached the financial milestone to retire comfortably and confidently
Reflection Stage: When you are looking to leave a legacy
We are also here to provide experienced, empathetic support during times of loss, such as the death of a life partner. You need confidence and a sense of security to enjoy retirement. As fiduciaries with a fee-only structure, we never receive commissions. Free of ulterior motives, you can be sure we’re focused on your goals.
Continued Readings:
Sources:
https://www.ssa.gov/benefits/retirement/planner/applying7.html
“5 Things Every Woman Should Know About Social Security” https://www.ssa.gov/pubs/EN-05-10044.pdf
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