Social Security: Spousal Benefits and More

Social Security is best known for its retirement benefits, and for good reason. It is the largest retirement program in the United States and most U.S. workers will receive retirement income through Social Security at some point in their lifetime.  Many Americans contribute to Social Security for years without knowing the full potential of the program. But Social Security goes beyond retirement benefits.

Social Security also has two additional programs that can be extremely valuable to clients in planning their estates. These are benefits for spouses of retired workers and survivors of deceased workers, and it’s important to be familiar with both.

SS Spousal benefits

Social Security benefits for retired workers are designed to replace about 40% of the average person’s pre-retirement income. The idea is when you combine Social Security with other sources of retirement income, like 401(k)s, IRAs, or pensions, you’ll have enough to maintain your lifestyle after leaving the workforce.  In situations where one spouse in a married couple was a stay-at-home parent who never worked, didn’t work long enough to qualify for Social Security retirement benefits, or earned relatively little throughout their careers compared with their spouses, Social Security offers benefits for spouses. The short version is that a spouse of a retired worker can be eligible for a monthly Social Security benefit too. The amount varies but can be as much as half of the primary “insurance” amount, which is what the spouse’s benefit would be at full retirement age. For example, if your Social Security retirement benefit—as a retired worker—at full retirement age is $2,500 per month, your spouse could be eligible to receive payments of as much as $1,250.

The criteria:

  • The spouse must be at least 62 years old—the age everyone must meet to qualify for retirement benefits—or they need to be caring for a qualifying child who is under 16 or disabled; and
  • the retired worker—must have started collecting his or her benefit before a spousal benefit can be paid.

Claiming a spousal benefit early

Just like with Social Security retirement benefits, spousal benefits can be reduced if they are taken before the spouse reaches full Social Security retirement age. If they were born in 1960 or later, their full retirement age is. Eligible spouses can start collecting a benefit as early as age 62, but it will be reduced according to the following rules:

  • A spousal benefit is reduced by about 0.69% for each month prior to full retirement age, up to 36 months.
  • Beyond 36 months, the benefit is reduced by another 5/12 of 1% (about 0.42%).

Typically, if a spousal benefit is claimed at 62, it will be permanently reduced by 35% if the beneficiary’s full retirement age is 67. For example, if the spouse is entitled to a $1,250 monthly spousal benefit and claim at age 62, the initial benefit would be reduced to $812.50.

Before payment of spousal benefits, the spouse’s work record is first considered. If their own retirement benefit is higher than one-half of the primary insurance amount, then that’s what the spouse will be entitled to. But if their own retirement benefit is less than half of the primary insurance amount (or if it is zero), a spousal benefit will be paid.

Social Security survivors’ benefits 

Social Security also has a program known as survivors’ benefits that is designed to provide income to families of workers who die prematurely.

If your spouse is at full retirement age or older, the surviving spouse would be entitled to the deceased spouse’s retirement benefit, assuming it is higher than what the surviving spouse would get on their own work record. If the surviving spouse has not yet reached full retirement age, they could receive a reduced benefit based on a specific formula until they reach full retirement age.

Spouse’s age and other circumstances% of your basic benefit amount
Full retirement age and older100%
Age 60 to full retirement age71.5% to 99%
Age 50-5959% to 71.5%
Disabled or caring for a child under 16 (any age)75%

Data source: SSA, accessed May 31, 2023

Even if a surviving spouse is divorced, they could still get a survivors benefit on the deceased spouse’s work record if the marriage lasted at least 10 years.

Social Security also provides survivors benefits to children, as well as other survivors in certain circumstances.

If the deceased has surviving children under 18 (or under 19 if they’re still in high school), or if the deceased’s elderly parents are dependent, they could also be eligible. Surviving dependent parents aged 62 or older can get a survivors benefit equal to 82.5% of the worker’s retirement benefit (75% each if there are two surviving dependent parents).  Surviving children could receive a survivors benefit equal to 75% of the basic retirement benefit amount.

The Social Security Administration sets a family maximum that can be paid out to survivors. While the formula is a bit complicated, the result is that the family maximum generally falls between 150% and 180% of the worker’s primary insurance amount or benefit at full retirement age.

If the eligible benefits exceed this, all survivors benefits will be reduced proportionally. As a simplified example, if survivors are entitled to a combined 300% of the worker’s primary insurance amount, and their family maximum is 150%, all survivors benefits would be cut in half.

Social Security—and its spousal and survivors’ benefits—is only one component of a wealth and estate plan. These are benefits however that will be coordinated by your team of advisors.

If you would like to know more or to take advantage of our complimentary initial meeting call or email our office to schedule – or (512) 263-5400.