Social Security spousal rule
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A long-standing Social Security spousal rule is coming to an end this year for most individuals, except those who turned 70 on Jan. 1, 2024.
Benefits
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This rule allowed recipients to switch between their own benefits and their spouse’s benefits to receive the maximum payment.
Jan. 1, 1954
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However, if you were not born before Jan. 1, 1954, you will no longer have the opportunity to take advantage of this provision.
Expired
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Under the now-expired rule, the spouse with the higher earnings would claim spousal benefits at full retirement age, while the other spouse would claim their own benefits.
Higher-earning
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The higher-earning spouse would then switch to their own benefits at age 70 to maximize the monthly Social Security payment through delayed retirement credits.
Lower-earning
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The lower-earning spouse could choose to claim a spousal benefit or retain their own, depending on which option yields a higher payment. With this rule no longer applicable, it is essential to explore alternative strategies to optimize spousal benefits. Here are three recommended steps to consider:
Plan Ahead
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Plan Ahead: Maximizing Social Security spousal benefits necessitates discussions about when and who should claim benefits. Social Security typically pays the higher of an individual’s benefits or spousal benefits to the lower-earning spouse.
Claim benefits
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It is advisable for couples looking to claim benefits to set up an online account with the Social Security Administration to assess their estimated benefits at different claiming ages, as highlighted by MarketWatch.
Crtitical
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“It is critically important for married couples to do Social Security planning,” said Matthew Allen, co-founder and chief executive officer of Social Security Advisors, told MarketWatch.
Too early
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To maximize your Social Security benefits, it is advisable to refrain from claiming them too early. While the full retirement age is currently 67 for most individuals, you have the option to start receiving benefits as early as age 62.
Reduced
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However, if you choose to file at 62, your benefits could be reduced by up to 30% permanently.
Beneficiary’s payout
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For instance, if your full retirement benefit is $2,000 per month at age 67, filing at age 62 would decrease this amount to $1,400 monthly. It’s important to note that a spouse’s Social Security benefit is linked to the primary beneficiary’s payout.
Permanent
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Therefore, if your spouse claims benefits at 62, your spousal benefit will also face a permanent reduction.
Not necessary
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It is not necessary to wait until age 70 to file for Social Security benefits. Typically, the longer you delay collecting retirement benefits, the larger your monthly payment will be.
Retirement age
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Claiming benefits at full retirement age ensures you receive the full amount you are entitled to, while waiting until age 70 results in the maximum benefit. Just as individuals who claim early receive reduced payouts, those who postpone their benefits will see an increase in their payments.
Age 70
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However, spouses are unable to take advantage of the age 70 rule, as their benefits are limited to 50% of the primary beneficiary’s full retirement benefit.
Spouse
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Even if your spouse waits until age 70 to start receiving Social Security benefits, your maximum benefit will still be capped at 50% of the primary beneficiary’s full retirement benefit.
