Social Security benefits are crucial for retirement planning and financial security in the United States. Understanding how marriage affects Social Security benefits is essential for couples looking to optimize their retirement income. In this blog post, we will discuss the impact of marriage on Social Security benefits, focusing on spousal benefits, divorce, and the implications of the death of a spouse.
One significant advantage of being married regarding Social Security benefits is the availability of spousal benefits. Spousal benefits allow a non-working or lower-earning spouse to receive benefits based on their spouse’s work record. To be eligible, the marriage must have lasted at least ten years. The non-working or lower-earning spouse can receive up to 50% of their spouse’s full retirement benefit. It’s important to note that the primary worker’s benefit amount is not reduced when the spouse claims their spousal benefits.
A spousal benefit election can be more complex than what might appear on the surface. There are several options to consider. A detailed social security analysis is advisable to maximize the overall benefits for a couple.
For example, regarding Social Security elections for married couples, if both spouses are eligible for their retirement benefits and their benefits are more significant than the spousal benefit, they have several timing options to consider.
- Filing early: A married individual can file for Social Security retirement benefits as early as age 62, but doing so will result in as much as a 30% reduction in Social Security benefit for the person filing. In addition, the non-working or lower earning spouse could also have their spousal benefit reduced by as much as 35%.
- Filing at Full Retirement Age (FRA): Full Retirement Age is the earliest age at which individuals can receive their “normal” Social Security retirement benefit. For most people, FRA is between 66 and 67 years old, depending on the year they were born. Filing at FRA allows a non-working or lower-earning spouse to receive the full 50% spousal benefit, so long as the spouse also waits until his or her full retirement age to claim the spousal benefit.
- Delaying benefits: There are a number of reasons individuals might consider delaying claiming their retirement benefits past their FRA. By doing so, they can earn delayed retirement “credits”, increasing their benefits over time. The amount your benefit will increase goes up every month until you turn age 70. The rate at which your benefits increase by delaying also depends on the year you were born, but anyone born in 1943 or later will receive an 8% annual increase in their benefit per year of delay. This is a strong strategy for certain retirees if they can afford to elect this option. From a marital standpoint, non-working or lower earning spouses cannot claim their spousal benefit until the higher-earning spouse turns on their own Social Security benefit. Additionally, the spousal benefit is limited to 50% of the higher-earning spouse’s FRA (“normal”) benefit amount. This point is confusing to many people, so it bears repeating: the spousal benefit for a non-working or lower-earning spouse is not 50% of the higher earning spouse’s Social Security. It is at most 50% of the spouse’s FRA benefit, assuming the higher earning spouse does not begin their benefit before Full Retirement Age.
Divorce and Social Security Benefits:
Divorce can affect Social Security benefits. If a couple was married for at least ten years before divorcing, the non-working or lower-earning ex-spouse may still be eligible for spousal benefits. However, a few requirements must be met: the ex-spouse must be unmarried and 62 years old, and their own Social Security benefit based on their earnings must be lower than the ex-spousal benefit they are entitled to.
It’s worth noting that if a divorced individual remarries, they will generally lose their ex-spouse’s benefits. However, if that subsequent marriage also ends, either through divorce, annulment, or death, they may become eligible to receive their ex-spouse’s benefits again. (To answer a common question, if the second marriage lasts longer than 10 years, the divorcee can choose the ex-spousal Social Security benefit that would be larger.)
Death and Survivor’s Benefits:
When it comes to Social Security benefits, both married and divorced individuals may be eligible for survivor’s benefits in the event of their (ex-)spouse’s death. The surviving spouse can receive a survivor’s benefit equal to 100% of the deceased spouse’s retirement benefit. The marriage must have lasted for at least nine months or meet other specific criteria to qualify.
For divorced individuals, they could receive survivor’s benefits if the marriage lasted for at least ten years, they are at least 60 years old (or 50 years old if disabled), and the survivor’s benefit is higher than their own.
Again, marriage significantly impacts Social Security benefits, specifically concerning spousal benefits, divorce, and death. Understanding how marital status affects these benefits is crucial for individuals planning their retirement and ensuring financial security for themselves and their spouses. It’s advisable to consult with a financial advisor or the Social Security Administration to get personalized information based on your circumstances.
If you have any questions regarding ways to maximize your Social Security Benefits based upon a detailed analysis of all options, or if you have any other questions regarding the impact of marriage, divorce, or the death of a spouse upon your potential Benefits, please get in touch with BentOak Capital.
BentOak Capital can prepare a detailed analysis considering all the options available for your circumstances and assist you in making the best selection to maximize your total family Social Security Benefits. We look forward to helping you.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.