A Social Security rule that has been around for decades is officially dead. This rule, called the spousal rule, has allowed couples to switch between their benefits to maximize their overall benefits. Though the Social Security spousal rule is no longer available, a few Social Security strategies for spouses are still available to help them maximize their benefits.
Using the spousal rule, the higher-earning spouse would claim the spousal benefits at FRA (full retirement age) based on the other spouse’s work record. At age 70, the higher-earning spouse would claim or switch to their own benefit, which would have stretched to the maximum because of the delayed retirement credits.
Also, the other spouse would now have the option to either claim a spousal benefit or continue with their own benefits, depending on which is more.
The spousal rule officially ended for all except those who turned 70 on Jan. 1, 2024. This means that you won’t be able to benefit from this rule unless you were born before Jan. 1, 1954.
Now that the rule has officially ended for most of us, we won’t be able to benefit from it. Luckily, a few Social Security strategies for spouses are still available to help them maximize their benefits.
First and foremost, it is very important that you discuss with your spouse the timing of claiming benefits. Although the spousal rule is dead, the SSA still allows the lower-earning spouse to claim the spousal benefits if it is higher.
To help couples decide the age to claim benefits, it is recommended that couples create an account with the SSA. The account will show them their estimated benefits at different claiming ages.
Even though the full retirement age for most people now is 67, one can claim benefits as early as age 62. Your benefits, however, get permanently reduced by up to 30% if you claim benefits early.
Since spousal benefits depend on the benefits of the primary beneficiary, and if the latter claims the benefit at age 62, the benefit of the other spouse will also be reduced permanently.
Claiming early reduces your benefit, while claiming late, i.e., beyond FRA, but up till age 70 increases your benefits. This means that delaying claiming benefits until age 70 ensures the maximum benefit. However, it is not always recommended to delay claiming benefits until age 70.
This is because the spousal benefit is capped at 50% of the primary beneficiary’s full retirement benefit. Even if the primary beneficiary waits until age 70 to claim the benefit, the spousal benefit would equal 50% of the primary beneficiary’s benefit at FRA.
Thus, it is very important that couples plan ahead as to when to claim their benefits. They can use their SSA account to get an idea of their estimated benefits. A better option would be to consult a financial expert, who, after evaluating your financial goals, will be in a better position to suggest when to claim benefits.
Points to remember
There are a few important points that you need to know before you claim benefits:
You only receive spousal benefits if your partner is receiving them
If you are claiming spousal benefits, you won’t be able to claim them unless the other spouse has already claimed them and is receiving them. Forgetting this rule could lead to difficulty in a few scenarios.
For instance, if the primary spouse plans to delay claiming benefits until age 70 to maximize their benefit, it will prevent their spouse from claiming the spousal benefit at their FRA. In such a case, the spouse won’t be able to claim the benefit until the primary spouse claims at age 70.
Another scenario is when the primary spouse suspends their benefit to earn delayed retirement credits. In such a case, the spousal benefit received by the other spouse will also be suspended.
Spousal benefit is higher of the two if both spouses are working
At least one spouse should be working to claim the spousal benefits. If both spouses are eligible for benefits based on their own work record, it may help couples maximize their benefits.
The higher-earning spouse will be eligible for higher benefits, than the spouse whose lifetime earnings were less. Despite less earnings, the lower earning spouse will automatically receive the larger of the two benefits, i.e., benefits based on their record or 50% of the spousal benefit based on the higher earning spouse’s benefits.
It must be noted that a spouse can’t claim spousal benefits while waiting for their own benefit to increase due to delayed retirement credits. If spouses apply for Social Security, they automatically apply for both benefits and, thus, receive the bigger of the two benefits.
Maximize survivor benefits, if possible
Survivor benefits, as the name suggests, is the benefit you receive after the death of your spouse. Though no one even wants to think about losing a partner, the survivor benefit is something that couples need to consider when planning their Social Security.
If one person dies, the surviving spouse becomes eligible for survivor’s benefits. In the case of the death of the higher-earning spouse, the surviving spouse has the option to claim the survivor’s benefit early and delay their own benefits until FRA or age 70.
The survivor benefit can be 71.5% to 99% of the deceased worker’s benefit, while the spousal benefit is 50% of the spouse’s benefits. Similar to spousal benefits, the survivor benefits are reduced if the late spouse claimed the benefit at age 62.
If the surviving spouse remarries before age 60, they won’t be able to receive survivor benefits while they are married. However, if they remarry after age 60 (age 50 if you have a disability), you will continue receiving survivor benefits.
