Most taxpayers are aware of the pension benefits of Social security system. But perhaps one of the biggest benefits of the whole program, the spouse benefit, is not so well known. Spouse benefit allows for lifelong pension payments to eligible spouses even if they have never worked a day in their entire lives. But as with any government program, there are a number of rules and regulations that you need to know to maximize your benefit. Here’s a look at some of the key features of Social Security spouse service that you may not be familiar with.
Your spouse’s benefit may be greater than your own personal benefit
If you only work part-time or have large gaps in your employment history, you may not think you will be entitled to much from Social Security when you retire. But if you are married, you may end up receiving more than you could imagine.
If you wait to apply for a spouse’s benefit until full retirement age, which is 67 years for those born in 1960 or later, your social security benefit will be the greater of your own qualifying benefit or 50% of your spouse’s benefit.
For example, if your spouse is entitled to a $ 3,000 monthly payment from Social Security, you can claim a $ 1,500 monthly benefit when you reach full retirement age. Since the average social security benefit for most workers in mid-2021 was $ 1,555, it is quite possible that your spouse’s benefit will exceed the size of your own personal benefit.
If your spouse claims benefits early, your payout will suffer
The amount a recipient receives from Social Security depends on both their work record and when they submit. Although full retirement age is now 67 for most workers, you can file a claim to start benefits as early as age 62. However, your benefits will be permanently cut by 30%. In other words, if your full retirement benefit is $ 2,000 per month. month at age 67, the monthly amount will drop to just $ 1,400 by filing it at age 62.
A spouse’s social security benefit is directly linked to the payment that the primary recipient receives. If your spouse applies for unemployment benefits at age 62, your own spouse’s benefit will also be permanently reduced. Instead of receiving 50% of your spouse’s full retirement age of $ 2,000 or $ 1,000 per month, you would only receive $ 700 or 50% of your spouse’s reduced payout of $ 1,400.
Spouses will not earn a major benefit by waiting to submit an application at the age of 70
Just as workers face a reduced social security pension payout if they claim early – as at age 62 – those who delay their payouts will see them increase. If you were born in 1943 or later, each year you wait to have your benefits translated into an 8% increase in benefits paid, up to 70 years. This corresponds to a payment at age 70 of 132% of your full retirement age. In other words, if you were to receive $ 2,000 a month at age 67, your 70-year monthly benefit would increase to $ 2,640.
However, spouses are not entitled to a share of this benefit, as their payment is limited to 50% of the full pension benefit of the primary beneficiary. In other words, even if your spouse waited until age 70 to collect the $ 2,640 monthly payment, your maximum benefit would remain at 50% of $ 2,000 or $ 1,000 per month. month.
Even if you are divorced, you may be entitled to benefits
Even those who are aware that social security provides a spouse benefit may think that divorce ends this possibility. In many cases it does, but if you were married at least 10 years before you got divorced and you have not remarried, you are still entitled to the same spouse benefit from Social Security as before. In other words, at full retirement age, even if you are divorced, you can claim a benefit to the value of 50% of your former spouse, as long as you were married for at least 10 years and are not married again. However, this benefit will be reduced if you apply before full retirement age, just as it is for any worker who claims a social security pension.
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This article was originally published on GOBankingRates.com: 4 Things You May Not Know About Spouse Benefits From Social Security