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Spousal benefits

Social Security spousal benefits allow one spouse to draw a benefit based on the earnings record of their current spouse, or in some cases a divorced ex-spouse.

Once you reach age 62, you are entitled to receive a spousal benefit even if you have never worked. Filing for a spousal benefit at age 62 results in a benefit that is 33%–35% of your spouse’s benefit, while filing at your full retirement age, or FRA, (66 for those born prior to 1955 and 67 for those born in 1960 or later, and prorated if you were born between those two years) provides a benefit that is 50% of your spouse’s benefit.

With the elimination of the file and suspend with a restricted-application claiming strategy for couples, the landscape for taking a spousal benefit has changed. Prior to this, one spouse would file and suspend their benefit while the other could file a restricted application for a spousal benefit based upon the first spouse’s earnings record.

The benefit of this approach was that by taking the spousal benefit you were able to receive a benefit for four years while letting your own benefit grow up to the maximum level at age 70. At that point you had the option of taking the larger of the spousal benefit or your own. In the meantime, the spouse who suspended their benefit was able to allow their benefit to continue to grow as well.

Those born prior to 1954 are grandfathered in for the use of the restricted application to claim a spousal benefit once they reach their FRA. The catch is that the spouse from whose earnings record they will be claiming the benefit must be drawing a benefit themselves. Suspending your benefit is still allowed, but nobody can then claim a spousal or any other sort of benefit off of your earnings record while your benefit is suspended.

For those not grandfathered in or who choose to file for a spousal benefit prior to reaching their FRA, they will fall under Social Security’s Deemed Filing rules. This means you will be “deemed” to have filed for all benefits you might be entitled to, so filing for a spousal benefit will trigger all benefits you are entitled to, including your own if higher than the spousal benefit.

While the spousal benefit may still make sense, with the elimination of the file and suspend option and related changes, it is less desirable than it once was.

Spousal benefits for an ex-spouse

If you are divorced, you may be eligible to receive a spousal benefit based upon their earnings record if:

  • You were married to your ex-spouse for at least 10 years;
  • You are currently not married;
  • You are at least 62 years of age;
  • Your ex-spouse is entitled to a Social Security benefit; and
  • Your own benefit is lower than the benefit you would be entitled to receive as the spousal benefit.

If you do remarry, you cannot collect a spouse benefit based upon your ex-spouse’s record unless this marriage ends (via death, divorce or annulment).

If your ex-spouse has not yet applied for their benefit but is entitled to one, you can still apply for a spousal benefit as long as the marriage ended at least two years ago.

If you are entitled to a benefit based upon your own earnings record your will receive that benefit first. If the benefit based upon your ex-spouse’s earnings record is higher, you will receive the difference to bring the total benefit you receive to that higher level.

The spousal benefit is one-half of your ex-spouse’s benefit if you file at your FRA; it will be lower if you file for the benefit prior to that age. Note the deemed filing rules apply here as well, for those who turn 62 on or after Jan. 2, 2016, as mentioned above.

Survivor’s benefits

Social Security survivor’s benefits provide added protection and security to widows and widowers of deceased workers, as well as other surviving family members.

Survivor’s benefits allow the surviving spouse to take the greater of their own benefit or the benefit their late spouse was receiving.

The survivor’s benefit represents a financial planning opportunity for married couples prior to claiming their Social Security benefit. If the higher earning spouse waits to claim their benefit until they reach their FRA, in the event they die first, the survivor’s benefit based upon their earnings record increases substantially.

At the time of your death, your then-current spouse, or in some cases an ex-spouse, can receive a survivor’s benefit based upon your earnings record. Your widow or widower can receive this benefit as early as age 60, varying as follows:

  • If the surviving spouse has reached their FRA, they would receive 100% of their deceased spouse’s benefit.
  • If the surviving spouse is between age 60 and their FRA, they would receive between 71.5% and 99% of their late spouse’s benefit.
  • If the surviving spouse is disabled and between the ages of 50 and 59, they would receive 71.5% of their late spouse’s benefit.
  • If the surviving spouse is caring for a dependent child under the age of 16, they would receive 75% of their late spouse’s benefit.

In addition to a surviving spouse, other family members can be eligible to receive survivor’s benefits based upon your earnings record:

  • A child who is under age 18 (or age 19 if still in high school or elementary school) or who is disabled would receive 75% of their deceased parent’s benefit.
  • Dependent parents of the deceased worker who are age 62 or older would receive 82.5% of the deceased worker’s benefit for one parent and 75% each if there are two surviving parents.

In addition, if you are divorced and your ex-spouse passes away, you may be eligible for a Social Security survivor’s benefit. Some of the eligibility requirements include:

  • The marriage to this ex-spouse must have lasted at least 10 years.
  • You must currently be unmarried, or if remarried, that marriage must have taken place after you turned 60.
  • If you are caring for a child of this ex-spouse and the child is either under age 16 or they are disabled, the length of marriage rule is waived.

Because same-sex marriage is now the rule in all 50 states, Social Security recognizes valid same-sex marriages for purposes of determining entitlement to Social Security benefits.

Summary

The Social Security survivor’s benefits available to widows and widowers can provide a means for the surviving spouse to make up for the financial loss due to the death of their spouse. It is important to understand these benefits and for couples to consider them when deciding when to claim their respective Social Security benefits.

Spousal benefits can also be used to enhance your retirement, but with the new rules you need to be careful about filing and how this might impact your own benefit.

Roger Wohlner Freelance Contributor

Roger Wohlner is an experienced financial advisor, finance blogger and freelance writer based in Arlington Heights, Ill. His expertise includes providing financial planning and investment advice to individual clients, 401(k) plan sponsors, foundations and endowments.

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