You probably already know that if you’ve worked most of your life, you can collect Social Security in retirement. But did you know that your spouse can collect their own benefit based on your work history, even if they never worked outside the home?
Questions about this issue can make you wonder how a spouse may fare financially when you retire, or even if you were to pass away. Questions like:
- How much (if any) social security is my spouse eligible for in retirement?
- Can a spouse collect social security if they never worked outside the home?
- At what age can they start collecting?
- If I am divorced, can an ex-spouse still collect on my behalf, or can I collect on theirs?
- What are the drawbacks and benefits of waiting to collect?
All of these considerations can cause stress and anxiety if you don’t know what you’re dealing with. Gaining a clear understanding of how spousal benefits work in retirement is crucial to your peace of mind as you approach this milestone.
In this article, we’ll go over some of your most pressing questions on how to understand, navigate, and maximize spousal benefits in retirement.
Understanding Spousal Retirement Benefits
Spousal retirement benefits are money that is paid to your spouse based on your work history when they retire. The difference between spousal and individual benefits is that individual benefits are based on your own work history, whereas spousal benefits are based on your spouse’s work history.
To be eligible for their own benefits, your spouse has to have worked for at least 10 years, or 40 “credits” worth of earnings. In 2023, 1 credit = $1,600 and you can earn up to 4 credits per year.*
Maybe you worked while your spouse stayed home to care for children and/or the home, or vice versa. The good news is that even if you or your spouse never worked, you or they can still collect Social Security based on the other’s work record as long as you were married for at least 1 continuous year (12 months) before you retire.
Perhaps you both worked, but one of you made significantly more money than the other. If that is the case, your spouse can either collect based on their own work record, or they can collect on yours—but not both. Social Security pays the higher of the two benefits, either based on your spouse’s full individual work record or up to 50% of yours at full retirement age.
Factors Affecting Spousal Retirement Benefits
Social Security benefits are based on your highest 35 years of earnings, and are adjusted or “indexed” to account for inflation and changes in average wages over time. So the longer you worked and the more money you made, the more benefits you are likely to receive in retirement.
You can begin collecting Social Security as early as age 62, or you can opt to wait until full retirement age or longer—and the same goes for your spouse. Your full retirement age is the time where you will receive your full retirement benefit. It depends on the year you were born, and is typically between the ages of 66 and 67.
If you start collecting before your full retirement age, your Social Security benefit will be reduced by a certain percentage. If you delay collecting your benefits until after your full retirement age, your benefits will be increased by a percentage each month up until age 70.
Divorce and Benefits for Ex-Spouses
It may come as a surprise that an ex-spouse can collect Social Security based on your income (or that you could collect based on theirs), and neither of you can do anything to stop it. The good news is that even if that should happen, it does not affect the amount of your benefit or the benefit of any current spouse you may have.
Factors that determine whether an ex-spouse is eligible to collect based on your work record:
- The length of your marriage to them
- Their amount of earnings compared to your own earnings
- Whether or not they remarried (as well as what age, whether that remarriage is still intact, and whether that spouse is still alive)
In order for an ex-spouse to be eligible to collect based on your record, you and your ex-spouse had to have been married for at least 10 years (120 months). If the ex-spouse remarried before the age of 60, they would not be not eligible to receive Social Security based on your work record. Exceptions to this are if that remarriage has ended due to divorce, death, or annulment. If the ex-spouse has remained single since your divorce or remarried after the age of 60, they are still eligible to receive up to 50% of your benefit amount.
One important thing to note is that while they may collect based on your work record, this will not affect any benefit amount for you or your current spouse if you have remarried. Neither your benefits nor the benefits your current spouse may collect on your behalf will be reduced due to an ex-spouse collecting based on your record.
Survivor Benefits
Your spouse is able to collect up to 100% of your Social Security benefits if you should pass away. If they are already collecting their own benefit, they can opt to either continue receiving that benefit or to start collecting yours, whichever amount is higher. See the chart below for more details:
Maximizing Benefits
If you or your spouse wish to maximize your benefit, there are some things you can do to make sure you get the highest benefit available to you:
- Wait until age 70 to collect – This is by far the simplest way to increase your monthly benefit amount if you can manage it.
- Check to see whether your spouse’s or ex-spouse’s benefit is higher. You can visit your Social Security office to find out more.
- Years with no work count as zeros. If you’re making significantly more now than when you were younger, it could be advantageous to work a few extra years and increase your 35-year average, thereby increasing your benefit amount.
Case Studies and Examples
Here are some different ways your spousal benefits situation could play out.
Scenario 1: Derek and Sarah
Derek worked 40 years while his wife Sarah stayed home. They both chose to delay retirement until age 70. Derek receives the maximum Social Security benefit allowed, and Sarah collects 50% of that full amount based on Derek’s work record. So Sarah gets a benefit in addition to the amount Derek collects on his own at full retirement age. If Derek passes away, Sarah would be eligible to collect up to 100% of Derek’s benefit as a surviving spouse.
Scenario 2: Juanita and Karl
Juanita worked for 25 years and her husband Karl worked a lesser paying job. Karl retires at 62 and collects a reduced benefit because he began collecting before full retirement age, while Juanita waits until age 66 and collects her full retirement benefit. Karl could also opt to collect up to 50% of Juanita’s benefit if that amount is larger than his own.
Scenario 3: Tonya and Ray
Tonya and Ray both worked and they were married for 15 years. They divorced, and Tonya remarried before age 60. Tonya cannot collect a benefit based on Ray’s work record since she remarried before age 60, but she would be eligible to collect based on her second husband’s record if it was higher than her own.
Scenario 4: Robin and Pete
Robin and Pete have been married 10 years and both worked. Pete makes significantly more money than Robin. They both collect their own benefit at full retirement age, then Pete passes away. Robin can now opt to collect up to 100% of the Survivor’s Benefit based on Pete’s work record, since it is higher than her own.
Important Considerations
Just as with any financial matter, there are important considerations to take into account when planning for spousal benefits in retirement. Things like:
- Tax implications of spousal retirement benefits
- Potential impacts on Social Security’s long-term sustainability
- Same-sex couples**
- Pensions vs. Social Security benefits
In addition to what we’ve covered here, be prepared to discuss any of these issues with a trusted financial professional.
Conclusion
In this article, we’ve covered the basics of spousal benefits in retirement: Who can collect, what factors come into play, and ways to maximize your benefits. Understanding these spousal benefits can feel overwhelming, but it doesn’t have to. While the facts and resources shared here can give you a good idea of what to expect, it is important to stay informed on the most up-to-date information, as well as any other ways to maximize your benefits.
At Better Money Decisions, we have a dedicated team of professionals who can walk you through your options as you plan for retirement, so that you and your spouse can move forward with confidence every step of the way. Click here to set up a no-obligation conversation today.
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*Fact sheet from the Social Security Administration for the basics on credits, earnings, and how those items are calculated. Click Here to view the Fact Sheet
**Visit this link for more info on Social Security benefits for same-sex couples. Click Here for Benefit Information
