A longstanding Social Security rule known as the spousal rule, which allowed couples to maximize their benefits by switching between their own and spousal benefits, is no longer in effect. Despite the end of this rule, several strategies remain available for spouses to optimize their Social Security benefits.
Understanding the Spousal Rule
The spousal rule allowed a higher-earning spouse to claim spousal benefits at Full Retirement Age (FRA) based on the other spouse’s work record. At age 70, the higher-earning spouse could then switch to their own benefits, which would have grown due to delayed retirement credits. Meanwhile, the other spouse could choose between claiming a spousal benefit or continuing with their own benefits.
However, this rule is now only available to those who turned 70 by January 1, 2024, meaning that the majority will no longer benefit from it. Fortunately, there are still a few strategies for spouses to consider.
Current Strategies for Spouses
It’s crucial to discuss the timing of claiming benefits with your spouse. While the spousal rule is no longer an option, the lower-earning spouse may still claim spousal benefits if they are higher than their own. Couples can create an account with the Social Security Administration (SSA) to view their estimated benefits at different ages and make informed decisions.
Although FRA is now 67 for most people, benefits can be claimed as early as age 62, though doing so results in a permanent reduction of up to 30%. Since spousal benefits are linked to the primary beneficiary’s claim, if they claim at age 62, the spousal benefit will also be permanently reduced.
Claiming benefits after FRA but before age 70 can increase your benefits, as waiting until age 70 guarantees the maximum payout. However, delaying isn’t always advisable because the spousal benefit is capped at 50% of the primary beneficiary’s FRA benefit, even if they wait until age 70 to claim.
Key Points to Consider
- Spousal Benefits Depend on the Primary Beneficiary’s Claim: A spouse can only claim spousal benefits if the other spouse has already claimed theirs. If the primary spouse delays claiming until age 70, the other spouse must also wait to claim spousal benefits. Similarly, if the primary spouse suspends their benefits, the spousal benefits will also be suspended.
- Maximizing Benefits When Both Spouses Work: If both spouses are eligible for benefits, the lower-earning spouse will receive the larger of their own benefit or 50% of the higher-earning spouse’s benefit. However, spouses cannot claim spousal benefits while waiting for their own benefit to increase due to delayed retirement credits; they will automatically receive the higher of the two benefits when they apply.
- Maximizing Survivor Benefits: Survivor benefits, available after the death of a spouse, can be a critical consideration. The survivor benefit can range from 71.5% to 99% of the deceased spouse’s benefit. If the higher-earning spouse passes away, the surviving spouse may choose to claim survivor benefits early and delay their own benefits until FRA or age 70. It’s important to note that remarrying before age 60 generally disqualifies a spouse from receiving survivor benefits while married, though remarrying after age 60 (or age 50 if disabled) allows continued receipt of these benefits.
By understanding and utilizing these strategies, spouses can still find ways to maximize their Social Security benefits despite the end of the spousal rule.