Did you know that you might be able to receive Social Security benefits based on your spouse’s earnings record that are higher than you can receive on your own earnings record? This applies to your current spouse and possibly a former spouse as we’ll discuss.

Spousal benefits usually come into play when one spouse had earnings substantially higher than the other over his or her lifetime. Note that this includes situations where one partner does not qualify for benefits at all on his or her own record. That person can still collect benefits on the spouse’s qualifying record.
 

The first situation to look at is if you are currently married and over age 62. The lower earning spouse can apply to receive one-half of the higher earning spouse’s Full Retirement Age (FRA) benefit, which makes sense if his or her own benefit would be less than that. As usual, if the lower earning spouse starts collecting benefits before his or her own FRA (see earlier blog article), the monthly benefit amount will be reduced. But a key difference between your own benefits and spousal benefits is that there is no benefit increase after FRA. So if you intend to apply for spousal benefits, you should do so no later than your own FRA because the amount is not going to go any higher than that, ignoring the inflation adjustments which everyone receives.

The typical case for spousal benefits is when one spouse was the sole breadwinner while the other stayed home to raise the kids. There are still a lot of new retirees in this position, but it is becoming less common as more families have dual incomes.

The next type of spousal benefit is a survivor benefit. In this case, the surviving spouse can receive his or her own benefits or the spouse’s full benefit, whichever is higher. So this has a potentially large impact and may be worth planning around. For example, let’s look at when one person collects spousal benefits at 50% of the partner’s record. If that person lives longer, his or her benefit will effectively double because he or she will now qualify for 100% of the deceased’s record. On the flip side, if the higher earning spouse lives longer, there’s no increase in benefits. So from a family perspective, if you have reason to believe that the higher earning spouse has a shorter life expectancy, it might make sense to have that high earner delay collecting benefits so that the surviving spouse can step up to a higher benefit level. If the high earner instead takes benefits early, he or she is not only locking in a somewhat lower benefit for his or her life, but it could be locking in a significantly lower benefit for the surviving spouse as well.

You may have already figured out that if we’re talking about current retirees where there was a much higher earner, who also has a lower life expectancy, we’re usually talking about the husband. Maybe that changes over time, but historically that has been the case. As discussed in an earlier blog article, we see very few retirees delay taking benefits for any reason, which means many of them are leaving their surviving spouse with potentially much less income when they’re gone. This is definitely an area where a lack of education about how benefits work appears to be leading to decisions that may not be in the family’s best interest.

Moving on, another type of spousal benefit is for a divorced spouse. You may be entitled to the higher of your own benefit or your previous spouse’s benefit if two conditions are met: you were married for at least 10 years and you are not currently married. If you are currently married, you default to the normal spousal benefit option (you may qualify for higher benefits based on your current spouse’s record) and not the divorced spouse option. Also, if you have been divorced more than once, you can choose whichever previous spouse’s earning record is higher to draw benefits on. As always, drawing benefits earlier rather than later will reduce your monthly amount.
 

Note: This blog article is one of a series related to Social Security Benefits. Please also review the companion video (or just the slideshow) for a more expansive review.