The Big Social Security Blunder Married Couples Risk Making

The typical path toward collecting Social Security in retirement generally goes something like this: You work for a good number of years, you pay taxes on the wages you earn, and you eventually qualify for retirement benefits once you turn 62.

Then, if you wait until full retirement age (FRA), which is 67 if you were born in 1960 or later, you get your monthly Social Security checks without a reduction. If you choose to delay your claim beyond that point, your benefits get a boost until age 70.

For couples where one person never worked, there can be a different path toward Social Security — spousal benefits.

Spousal benefits are available to current and former spouses of Social Security recipients. And they can be a huge source of household income.

But there’s one mistake married couples risk making in the context of spousal benefits. And it’s one you and your spouse should try to avoid.

Don’t file for spousal benefits at the wrong time

The rules of claiming spousal benefits aren’t exactly the same as claiming Social Security based on your own work record. When you’re claiming benefits on your personal wage history, you get credit for delaying past FRA. Specifically, each year you wait boosts your monthly checks by 8%.

That incentive does not apply to spousal benefits, though. With spousal benefits, the most amount of money you can get is 50% of your spouse’s primary insurance amount at FRA. And if you delay a spousal benefit claim, you risk ending up with less household income from Social Security all in.

Let’s say your spouse’s primary insurance amount is $2,400 at their FRA. If you claim spousal benefits at your FRA, you should get $1,200.

Now it’s possible to claim spousal benefits before FRA — as early as age 62 — and reduce them in the process. But you can’t grow a spousal benefit by waiting. So once you reach your FRA, you should actually claim spousal benefits right away.

It’s important to know the rules

Because spousal benefits don’t work exactly the same way as traditional retirement benefits, it’s important to understand the ins and outs if someone in your household is eligible and planning to claim them. Another thing you should know is that if you’re married, you can’t claim spousal benefits until your spouse files for Social Security.

If you’re looking at spousal benefits, it’s important to understand how much they’ll pay and how that income factors into your overall retirement finances. If you’re expecting your spousal benefits to match the amount your spouse collects, you may be in for an unpleasant surprise.

That said, you should know that if the spouse who’s eligible for Social Security based on their own earnings record passes away first, the surviving spouse will no longer get spousal benefits. Instead, they’ll be bumped up to survivor benefits equal to the full benefits the deceased spouse was collecting.

In this example, your spousal benefit may max out at $1,200 based on your spouse’s $2,400 monthly benefit. But if your spouse passes away first, your monthly checks should double once the Social Security Administration is informed of the death.

Of course, in an ideal world, you’ll have income to live on in retirement outside of just Social Security. But these are still good things to know in the course of your planning.