Understanding Social Security Benefits for Married Retirees

Social Security plays a vital role in the finances of many retirees. According to a recent Gallup poll, 60% of retirees consider their monthly checks a significant source of income, while another 28% say it’s a smaller source. Deciding when to claim Social Security benefits is crucial for maximizing this government program’s potential.

For retirees without partners, the decision is straightforward: delay claiming benefits for as long as possible. However, those with spouses face a more complex situation that requires careful consideration to optimize benefits for both partners.

1. Your Earnings Can Affect Your Spouse’s Benefits

Many people know about spousal benefits, where a spouse can claim benefits based on the other’s earnings record, benefiting lower-earning partners. However, your own earnings could negatively impact your spouse’s benefits. If you work while your spouse is receiving Social Security, your income may lead to a deduction in their benefits due to the retirement earnings test.

The earnings test affects anyone collecting benefits before reaching full retirement age. If your spouse earns more than a set threshold, the Social Security Administration will reduce their benefits by $1 for every $2 earned over that limit. For the year 2025, the threshold is $23,400, or $62,160 for those reaching full retirement age that year. If your spouse is collecting spousal benefits based on your earnings record, their benefits may still be reduced even if they aren’t working, although this does not apply to their individual benefits.

After your spouse reaches full retirement age, the Social Security Administration will adjust any prior deductions from their benefits according to the earnings test. The adjustment reflects the benefits they would have received had they delayed their application for one additional month for each month benefits were reduced.

2. Spousal Benefits Depend on Your Spouse’s Claim

A significant challenge in collecting spousal benefits is the requirement that your spouse must be actively receiving Social Security for you to access those benefits. This can create difficulties for lower-earning spouses, who might be waiting for an older partner to start their benefits.

Spousal benefits can equal up to half of your partner’s primary insurance amount, which they would receive if they claimed Social Security when reaching full retirement age. If you claim Social Security before your own full retirement age, the Social Security Administration will reduce your spousal benefits, similar to how it affects personal benefits.

Unlike personal benefits, spousal benefits attain their full value only upon reaching full retirement age. Therefore, if you anticipate using spousal benefits, timing is crucial, as one spouse may need to wait longer for the other to begin benefits.

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3. Early Claiming Affects Survivor Benefits

For higher-earning spouses, claiming Social Security before age 70 can lower the survivor benefit your partner would receive if you pass away first. Survivor benefits correspond to the amount the deceased was receiving or would have received at death, whichever is higher. Many couples strategize for the higher earner to wait until age 70 to claim benefits.

It’s important to note that claiming either personal or spousal benefits early does not affect the survivor benefit’s value. This allows the lower-earning spouse to claim benefits early without impacting survivor benefits as long as they wait until full retirement age to claim them.

Consequently, many couples adopt the approach of the lower earner claiming benefits as soon as eligible, while the higher earner postpones claiming until 70.

The $22,924 Social Security Bonus You Might Miss

For many Americans, retirement savings may fall short, but certain lesser-known “Social Security secrets” could provide a financial boost.

Utilizing a simple strategy could add as much as $22,924 annually to your retirement income. Understanding how to maximize Social Security benefits is key to achieving financial comfort in retirement.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.