The spousal rule is gone, but Social Security strategies for spouses still exist.
Decades-old Social Security rules have been officially repealed. This rule, called the spousal rule, allows couples to switch benefits to maximize overall benefits. Although the Social Security spousal rule no longer applies, there are still several Social Security strategies available to help spouses maximize their benefits.
The spousal rule allows the higher-earning spouse to claim spousal benefits at full retirement age (FRA) based on the other spouse’s work history. At age 70, the higher-earning spouse will claim or convert his or her benefits, which may have been maxed out due to delayed retirement deductions.
Additionally, the other spouse can now either claim spousal benefits or keep his or her own benefits, depending on which is more.
The spousal rule officially ended for everyone except those who turn 70 on January 1, 2024. This means that unless you were born before January 1, 1954, you cannot benefit from this rule.
Now that the rule has officially ended for most of us, we can no longer enjoy its benefits. Fortunately, there are still several Social Security strategies that can help spouses maximize their benefits.
First and foremost, it is very important to discuss with your spouse when to claim benefits. Despite the repeal of the spousal rule, SSA still allows lower-income spouses to claim spousal benefits if their income is higher.
To help couples determine the age at which they will claim benefits, it is recommended that couples open an account with the SSA. Your account will show you the estimated benefits at different billing ages.
Full retirement age for most people is currently 67, but you can claim benefits as early as 62. However, claiming your pension early will permanently reduce your pension by up to 30%.
Spouse benefits depend on the primary beneficiary’s wages, so if the latter claims benefits at age 62, the other spouse’s benefits will also be permanently reduced.
Claiming early reduces your benefits, while claiming late (i.e. above FRA but increasing benefits until age 70) means that if you delay claiming benefits until age 70, you are guaranteed the maximum benefit. However, delaying claiming benefits until age 70 is not always advisable.
This is because spousal benefits are limited to 50% of the primary beneficiary’s total retirement benefit. Even if the primary beneficiary waits until age 70 to claim benefits, the spousal benefit is equal to 50% of the primary beneficiary’s benefit at FRA.
Therefore, it is very important for couples to plan ahead when to claim benefits. You can use your SSA account to get an idea of your expected benefits. A better option is to consult a financial professional. A professional will be in a better position to know when to claim benefits after assessing your financial goals.
Things to remember
There are a few important things you need to know before claiming benefits.
You receive spousal benefits only if your partner receives spousal benefits.
If you claim spousal benefits, you cannot claim them unless the other spouse has already claimed and received them. Forgetting this rule can lead to difficulties in several scenarios.
For example, if the primary spouse plans to delay claiming benefits until age 70 to maximize benefits, that spouse will not be able to claim spousal benefits at FRA. In this case, the spouse cannot claim benefits until the primary spouse turns 70.
Another scenario is when the primary spouse stops receiving benefits to obtain a delayed retirement credit. In this case, spousal benefits received by the other spouse will also be suspended.
If both spouses work, spousal benefits are higher of the two
To claim spousal benefits, at least one spouse must be working. It can help couples maximize benefits if both spouses qualify for benefits based on their work records.
A higher-earning spouse may receive higher benefits than a spouse with lower lifetime earnings. Despite earning less, the lower-income spouse automatically receives the greater of the two benefits: either the benefit on his or her record or 50% of the spouse’s benefit under the higher-income spouse’s benefit.
It’s important to note that spouses may not be able to claim spousal benefits while waiting for their benefits to increase due to delayed retirement credits. If your spouse files for Social Security, she will automatically apply for both benefits and therefore receive the greater of the two benefits.
Maximize survivor benefits whenever possible.
Survivor benefits, as the name suggests, are benefits received after the death of a spouse. No one wants to think about losing a spouse, but survivor benefits are something couples should consider when planning for Social Security.
If one person dies, the surviving spouse is eligible to receive survivor benefits. If the higher-earning spouse dies, the surviving spouse can claim her survivor benefit early and delay her benefit until FRA or age 70.
Survivor benefits can be up to 71.5% to 99% of the deceased worker’s benefit, and spousal benefits can be up to 50% of the spouse’s benefit. As with spousal benefits, survivor benefits are reduced if the deceased spouse claims benefits at age 62.
If the surviving spouse remarries before the age of 60, he or she cannot receive survivor’s pension while married. However, if you remarry after the age of 60 (age 50 for the disabled), you will continue to receive the survivor’s pension.
