Social Security benefits are typically earned through work and tax contributions. However, it is also possible to receive these benefits without ever working a day in your life. By being married to someone eligible for Social Security or being divorced from someone entitled to benefits, individuals may have access to spousal benefits. These benefits can amount to up to 50% of the benefits received by their current or former spouse.
Understanding the rules surrounding spousal benefits is crucial, and there is one mistake that should be avoided at all costs. Spousal benefits should not be delayed too long. Waiting until reaching full retirement age (FRA), now 67 for people born in 1960 or later, will make individuals eligible for 50% of their spouse or ex-spouse’s benefit.
However, filing for spousal benefits beyond FRA offers no financial advantage. Unlike claiming benefits based on one’s own earnings record, which can grow by 8% for each year delayed up to age 70, spousal benefits remain capped at 50%. Consequently, delaying a spousal benefit claim only results in a longer waiting period to receive the funds.
Although individuals can claim Social Security as early as age 62, it is important to note that doing so will permanently reduce the spousal benefit. Since the maximum amount one can receive is half of what one spouse collects, waiting until FRA ensures a higher payout. Familiarizing oneself with the various regulations associated with Social Security will be helpful in maximizing benefits.
Taking the time to read up on Social Security rules is essential for individuals considering either spousal or individual benefits. Those filing for benefits based on their own work record should explore different strategies to determine the optimal time for claiming Social Security. By doing so, retirees could enjoy lifelong financial support during their retirement years.
In conclusion, understanding the rules surrounding spousal benefits is crucial for retirees seeking to maximize their Social Security payouts. Delaying spousal benefits beyond full retirement age offers no financial gain, as the maximum amount one can receive remains at 50% of their spouse’s benefit. Taking the time to explore Social Security regulations is a worthwhile endeavor, ensuring retirees make the most of their well-deserved benefits.