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Social Security Benefits Update: You Need To Know These 3 Rules

A vital component of most American citizens’ retirement plans is Social Security. Approximately 50% of those 65 and older reside in households where Social Security accounts for half of the family’s income. Thus, it’s crucial to make sure you’re receiving the most out of the government program. Married couples can arrange for one partner to receive spousal benefits. One spouse may get Social Security benefits for spouses based on the other spouse’s earnings history. If they were to make a claim based only on their employment history, they might be eligible for a larger benefit, which would increase the family’s income significantly.

Can’t Collect Your Spousal Benefits

One issue that may confuse many married couples is the requirement that both parties file Social Security claims to get spousal benefits. When you take into account how it will impact the overall household benefits, that considerably complicates the process of making claims judgments. The other spouse may have to accept a smaller benefit or perhaps no benefit entirely until the better earner files for Social Security if the high earner waits till age 70 to maximize their benefit. Having said that, you can qualify for Social Security payments as early as age 62 based on your personal earnings history. Your benefit will be switched to the higher benefit by the SSA when your better-earning spouse registers for Social Security and you are qualified for spousal benefits.

Delayed Retirement Credits

At full retirement age, your partner’s PIA (primary insurance amount), or the maximum spousal benefit, is equal to 50% of that amount. It isn’t half of your spouse’s highest benefit, that is, the maximum benefit that can be enhanced with delayed retirement credits. For every year they wait past full retirement age, anyone claiming benefits according to their income history can accrue delayed retirement credits worth 8% of the primary insurance amount. Sadly, spousal benefit recipients will not receive an increase in income. Therefore, delaying a Social Security petition over the full retirement age is rarely wise for anyone who eventually plans to receive spousal benefits. For anybody born during 1960 or even later, that would be age 67. However, the full retirement age will be reached by individuals born in 1957 and 1958 at 66 and 6 months & 66 & 8 months, respectively. In 2025 or 2026, those who were born in 1959 will be eligible to claim their entire retirement income ten months after turning 66.

Claiming Early Might Reduce Your Benefit

Although each person’s circumstances are unique, many retirees will wait to collect benefits to maximize their household income as long as those benefits are growing. For a partner who will accept spousal benefits, that is full retirement age; for the spouse with a larger income, it is 70. You might not get as much in the Social Security payments as you were hoping for if you file a claim before you reach full retirement age. This holds valid even if you want to convert from claiming your benefit at first to a spousal advantage afterward, following your spouse’s application for their benefit. Therefore, don’t expect to see a significant increase in your benefit checks if you file at age 62 and wait until age 67 for your partner to file.

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