Eligibility for Social Security in retirement isn't a given. To collect benefits during your senior years, you generally have to work and help fund the program by paying Social Security taxes.
But it actually is possible to collect Social Security even if you don't have a wage history. If you're married to someone who's eligible for Social Security or are divorced from someone in that category, you may be entitled to collect spousal benefits.
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The rules of spousal benefits can differ from those that pertain to claiming Social Security based on your own work record, so it's important to understand how spousal benefits work. Here are three key aspects to keep in mind.
1. You can collect spousal benefits even if you're eligible for a benefit of your own
For some people, spousal benefits are their only ticket to any type of Social Security income in retirement. But if you worked for a period of time, you may be entitled to Social Security once you turn 62, which is the earliest age at which you can sign up.
Don't assume that you can't get spousal benefits if you're eligible for benefits based on your own income record. Social Security will allow you to sign up for them, but you can't receive a spousal benefit on top of your own benefit -- it's either one or the other.
The good news, though, is that Social Security will pay you the higher of your own monthly benefit or a spousal benefit. So if you're only eligible for $1,500 a month in Social Security but your spouse collects $3,200, your $1,600 spousal benefit is the more lucrative option -- and it's the sum Social Security will let you collect.
2. You can't file for spousal benefits until your spouse claims Social Security
If you're divorced, you don't have to wait for your ex-spouse to claim Social Security to collect a spousal benefit. But the rules are different if you're married. In that case, you can't sign up until your spouse does.
Your spouse may be interested in delaying their Social Security claim past full retirement age to boost their monthly benefit permanently. But that could cause you to have to wait on spousal benefits. So it's important to discuss a filing strategy jointly.
3. There's no sense in delaying a spousal benefit claim
When you're claiming Social Security based on your own earnings record, there's an incentive to wait past full retirement age. For each year you do, up until age 70, your monthly benefit will get an 8% increase -- for life.
But that incentive doesn't apply to spousal benefits. In that situation, the most you can collect in Social Security is 50% of your spouse's (or former spouse's) benefit at full retirement age. Once you reach full retirement age, it doesn't pay to delay your filing. You'll only be denying yourself income you could be enjoying sooner.
Social Security spousal benefits could end up playing a big role in your retirement finances. Read up on how they work so you can see how to make the most of them. Also, make sure your spouse understands how they work, even if they're the primary breadwinner in your household and are therefore in line for their own Social Security payday.
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