HomeMarket NewsUnveiling the Secrets of Social Security Spousal Benefits for Retired Couples

Unveiling the Secrets of Social Security Spousal Benefits for Retired Couples

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Being entitled to Social Security benefits is akin to winning a jackpot in old age. It’s not just a financial crutch but a testament to years of toil and sweat contributing to the system. With retiree income often heavily reliant on Social Security, it only makes sense for couples to explore the spousal benefits that can significantly boost their financial standing in retirement.

Deciphering the Calculation of Social Security Spousal Benefits

To dive into the realm of spousal benefits, a couple must have been married for at least a year, with at least one partner aged 62 or older. Alternatively, if caring for a child under 16 or one with disabilities who receives benefits on their record, eligibility is granted.

These benefits are a fraction of the primary claiming spouse’s primary insurance amount, typically capping at 50% when the claimant reaches full retirement age.

As an example, if Spouse A’s monthly benefit at full retirement age is $1,500, Spouse B could receive up to $750 per month, depending on the age they claim benefits.

The Significance of Full Retirement Age in Social Security

Entering the realm of Social Security, an individual’s full retirement age serves as a pivotal milestone. Reflected by birth year, every month claimed before this age is penalized at a rate of 5/9 of 1%, up to 36 months.

For those claiming spousal benefits, the reduction rate stands at 25/36 of 1% until reaching full retirement age, after which it adjusts to 5/12 of 1%. Importantly, unlike individual benefits, spousal benefits do not increase with delayed claiming.

The Interplay Between Social Security Spousal and Survivors Benefits

An interesting facet of Social Security emerges when a spouse passes away. Spousal benefits seamlessly transform into survivors benefits, potentially allowing the beneficiary to receive up to 100% of the deceased spouse’s benefits.

While survivors can claim benefits from age 60 (or 50 if disabled), similar reduction rules apply before reaching full retirement age. Notably, individuals cannot receive both spousal and survivors benefits simultaneously; they must opt for the higher-paying option, which is typically the latter.

In the grand scheme of retirement planning, understanding and optimizing these Social Security intricacies can unlock hidden treasures that fortify financial stability during the golden years.

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

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