Social Security remains one of your biggest assets as you work hard for 30 to 40 years and then retire comfortably in your mid-60s. Your retirement benefit covers both you and your spouse, but certain rules cover spousal benefits. Get acquainted with your benefits as they pertain to a spouse, disability and ages of retirement.
Spousal Benefits After Disability Benefits
If your spouse collects disability, it should automatically become full-fledged Social Security retirement when your spouse reaches full retirement age. The disability benefit only provides for excess spousal benefits until a disabled spouse reaches retirement age. One strategy to employ would be to live off of the retired spouse's benefits until the disabled spouse takes retirement benefits at the latest possible time at age 70. That way, the disabled spouse's retirement benefits max out at age 70, and you both reap the benefits of your hard work.
Spouse at Full Retirement Age
Some couples decide to wait to take one or both retirement benefits at full retirement age. A lot of your retirement strategy depends on your ages, incomes and expenses. For example, one couple started taking retirement at age 64 for the husband. His wife is seven years younger, and she receives higher spousal benefits if she waits to full retirement age at 66 rather than claiming the spouse's benefit sooner. If she takes her benefit before full retirement age, her own retirement benefit is permanently smaller.
Several financial companies have software online that can help you maximize your benefits, whether you have retirement, disability or spousal benefits. Some calculators are free, but others cost money to download to your computer. Software that has a fee may have more complex calculators that take into account the incomes of both spouses, their ages, the years they worked and other aspects of the complex formula that the agency uses to calculate your full benefit amount. The idea is that you can start making financial decisions as soon as possible to put you in the best position for retirement.
Changes in the Law
Remember the law that went into effect in 2015. Before then, benefits for spouses were 50 percent of your spouse's full benefit. After the change, the excess benefit for a spouse was the difference between the couple's individual benefit amounts. For example, a husband's full benefit is $2,000, and under the older law a spouse's benefit was $1,000 before full retirement age. With the changes made in 2015, one spouse's full benefit is $2,000 while the other spouse's full benefit is $1,700. The difference between the two figures, or $300, is the excess benefit for the spouse. The law changed benefits for people who weren't 62 before Jan. 2, 2016.
Surviving spouses have another set of rules to follow when earning benefits. Someone can remarry at age 60 or later and possibly receive benefits of both the late spouse and the new spouse. The surviving spouse has to wait 10 years to apply for the benefits of the person who passed away.
No matter your situation, spousal benefits are a complicated issue due to the mathematical calculations behind the retirement benefits. If the path is unclear after plugging in all your numbers with a planning calculator, consider getting advice from a licensed financial advisor.
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