How You Manage Your Social Security Account Affects Spousal Benefits in 3 Ways
Social Security is designed to support workers and their families by providing a guaranteed source of lifetime income for those who meet certain criteria. As such, they are an essential piece of your retirement planning puzzle. The decisions you make about your benefits may affect your spouse’s pension benefits. The key to getting the most Social Security benefits is knowing your specific benefits as individuals and when to file as a couple.
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As a spouse, you can claim social security benefits based on your own earnings or receive a spousal benefit of up to 50% of your spouse’s social security benefits, but not both. The authorized Social Security retirement benefit for a spouse begins at 32.5% at age 62 and gradually increases to 50% of the amount to which their spouse is entitled at normal age or retirement age at full rate, which is 66 or 67 depending on the year of birth. It is important to apply for benefits at full retirement age, as this will maximize your benefits.
Here are three things to keep in mind when considering Social Security benefits and how they may affect your spouse:
1. Income during your working years affects their spousal benefit.
It may sound simple, but the more you earn during your working years, the more you get on Social Security benefits, which are based on the average monthly earnings of your 35 highest-earning years. Any extra income you can earn now will increase your Social Security checks later, which will also increase your spouse’s benefits.
2. Your income affects their cost of living adjustments.
A cost of living adjustment (COLA) of 5.9% was made in January 2022, affecting more than 64 million Social Security beneficiaries. The bigger your cheques, the bigger the difference COLA makes. This is good news for spouses, as a spousal benefit could be based on your Social Security benefits.
3. Spouses cannot claim spousal benefit until you register.
Your spouse cannot claim spousal benefits until you register for Social Security benefits. If your spouse qualifies for their own benefits, they can claim them as early as age 62 and wait to start spousal benefits when you file your claim. This may be a smart move, as they will provide Social Security income while you wait to maximize your benefits upon reaching normal or full retirement age. If the spouse begins to receive benefits before full retirement age, your spouse will receive a reduced benefit. But if they don’t qualify for their own benefits at all, you might want to apply early to get your partner on Social Security income as soon as possible.
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