Social Security spousal, ex-spouse and widow’s benefits
For the elderly, retirement income often consists of a ‘three-legged stool’ comprising defined contribution plans [401(k)], pensions, and Social Security benefits. With roughly 40% of men and women dependent on Social Security for more than 50% of their retirement income, the government program helps many senior Americans protect from poverty.
Spousal and widow’s benefits were introduced in 1939 to help retired households. Spousal benefits allow those with no or little job history to earn money depending on their partner’s work history. In 2015, same-sex married couples and non-marital legal couples were eligible for spousal benefits.
These perks are beneficial for women who spend more time at home caring for children or parents. The National Institute on Retirement Security reports that 60% of caregivers are women.
Another Social Science Research Network research revealed that women with one kid received 16% less in Social Security benefits than women without children. However, spouse benefits helped to close the gap.
The motherhood penalty is minor for women receiving spousal benefits. In contrast, moms getting only their own Social Security benefits face considerably decreased Social Security income.
Jim Blair, principal of Premier Social Security Consulting, explains how spousal, ex-spousal, and widow’s benefits work.
Spousal benefits
The Social Security Administration (SSA) determines a worker’s monthly payments using a formula based on their 35 greatest earning years. To be eligible for worker’s compensation, one must have worked for ten years. Long-term employees tend to earn more benefits than those who have had several years of no or low pay.
Spouses can begin collecting spousal benefits at age 62 if the primary worker is already getting them and the couple has been married for 12 months or longer. If the spouse waits until full retirement age, spousal benefits can be worth up to 50% of the original worker’s payout.
The monthly spousal payment is lowered if someone collects benefits before the full retirement age (FRA). Blair notes that if a spouse is still working, their benefits might be reduced by up to 30%. Their payments may be reduced by up to 35% if they start receiving before the FRA of 67. The reduction depends on your FRA.
The average spousal benefit in February 2022 was $838.88. Remember that Social Security and spousal benefits are supposed to complement your retirement income, so you must also save for your retirement.
Your employer-sponsored 401(k) may not be the only option. Traditional IRA investors don’t pay taxes on their investments until they retire. A Roth IRA, on the other hand, is an after-tax retirement plan that allows investors to pay taxes upfront but grow tax-free over time.
The Social Security Administration (SSA) has an online calculator that shows how much spousal benefits would be based on when they are claimed. The SSA will automatically identify which is bigger, i.e., your own or your spouse’s, and pay the higher sum whenever you apply for benefits.
To provide the principal worker options, spouses should assess whether they should start collecting their own benefits before obtaining spousal benefits. The primary worker immediately transfers benefits to the spouse who is already receiving them by choosing to receive benefits. As a result, you can continue getting benefits until your spouse is ready. You can only accept your own or your spouse’s benefits, not both.
No matter when the primary worker collects benefits, the spouse is entitled to up to 50% of the primary insurance sum. In other words, the value of spouse benefits remains the same whether the primary worker receives them early or waits until 70.
If you have a disabled child or a child under 16, you may be allowed to claim benefits before you turn 62, but only if the primary worker is already collecting.
Ex-spouse benefits
Ex-spouse benefits are worth up to 50% of the primary worker’s benefits. They can be reduced if taken before the full retirement age (FRA).
Blair explains that there are two forms of ex-spouse benefits. To qualify for the regular divorced spouse benefit, you must be 62 years old, unmarried (the primary worker’s present marital status is irrelevant), have been married to the primary worker for at least ten years, and the primary worker also has to be getting their benefits.
The divorced spouse can obtain additional benefits based on their work record without the primary worker. The qualifications remain the same: you must be 62 years old, single, and married for at least ten years. If your ex-spouse is 62 or older and you’ve been divorced for two years or more, it doesn’t matter if they’ve claimed for benefits or not; you can still claim based on their work record.
On their Social Security application, applicants can state whether or not they had a prior marriage lasting at least ten years. The Social Security Administration (SSA) then evaluates eligibility for ex-spouse benefits.
If you aren’t qualified for the independently entitled divorced spouse benefit and your spouse hasn’t begun receiving it, Blair advises contacting the Social Security Administration (SSA) to check if your ex-spouse has started collecting.
Widow’s (or surviving spouse’s) benefits
Widow (or surviving spouse) benefits are worth 100% of what the late worker was getting, beginning at age 60. If you remarry before 60, you lose your eligibility.
Individuals can only get their own benefits or those of their widow (or surviving spouse), but not both. Blair points out that persons can claim widow (or surviving spouse) benefits first, then move to their own if those are bigger. Delaying collecting monthly payments for one year beyond full retirement age (FRA) increases its worth by 8%.
So SSA lets you take a smaller benefit, in the beginning, to receive a more considerable benefit later, explains Blair.
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After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
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Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.
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