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For the elderly, retirement income is typically composed of what the National Institute of Retirement Security calls the 'three-legged stool' — a combination of retirement savings from defined contribution plans such as a 401(k), a pension and Social Security benefits. With nearly 40% of men and women relying on Social Security benefits for more than 50% of their retirement income, the government program plays a vital role in ensuring that many elderly Americans don't end up in poverty.
Spousal and widow's benefits were first established in 1939 as a way to provide additional income to retired households. With spousal benefits, people with short or nonexistent work histories are able to earn money based on their partner's employment record. In 2015, married same-sex couples and other couples in non-marital legal relationships also became eligible to receive spousal benefits.
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Spousal, ex-spouse and widow's benefits are especially beneficial to women, who tend to take more time outside the workplace to care for children or elderly parents. According to the National Institute on Retirement Security 60% of caregivers are actually women.
Another study, conducted by the Social Science Research Network, found that women with one child earned 16% less in Social Security benefits than women without any children, however spousal benefits helped to erase the discrepancy in Social Security earnings between them.
"The motherhood penalty is almost negligible among women receiving spousal benefits, but mothers who receive benefits on only their own earnings histories see significantly lower Social Security income," the study states.
Select spoke with Jim Blair, lead consultant at Premier Social Security Consulting, to learn more about how spousal, ex-spouse and widow's benefits actually work.
The U.S. Social Security Administration calculates a worker's monthly benefits, known as the primary insurance amount, or PIA, using a formula based on their 35 highest-earning years. In order to qualify for worker's benefits, individuals must have worked at least 10 years. In general, those who have held steadier jobs for longer periods of time tend to earn higher benefits amounts than those who have encountered several years of no earnings or low earnings.
Spouses are eligible to receive spousal benefits starting at age 62 as long as the primary worker is already receiving them and the couple has been married for 12 or more months. Spousal benefits can be worth up to 50% of the primary worker's benefit as long as the individual waits until full retirement age to start collecting them.
If someone starts collecting benefits before reaching their full retirement age, the amount of monthly spousal benefits will be reduced. If a spouse is still under their full retirement age, benefits can shrink by as much as 30% if their full retirement age is 66, explains Blair. If their full retirement age is 67, their benefits may be reduced up to 35% if they start collecting at the earliest available age, he says.
"It just depends on your full retirement age as to how much of a reduction you'll see," says Blair.
As of Feb. 2022, the average spousal benefit was only $838.88. Keep in mind that Social Security benefits and spousal benefits are mainly meant to supplement an individual's retirement income, so it's essential to build up retirement savings of your own in addition to these benefits.
Besides maxing out your employer-sponsored 401(k), you might want to consider opening a traditional or Roth IRA. With a traditional IRA, you won't pay taxes on your investments until you take distributions when you retire. A Roth IRA, on the other hand, is an after-tax retirement account, allowing people to pay taxes on their upfront contributions so their investments can grow tax-free over time.
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The U.S. Social Security Administration provides an online calculator, which displays how much an individual would receive from spousal benefits depending on when they choose to collect them. Whenever you end up applying for benefits, the Social Security Administration will automatically determine whether your own benefits or spousal benefits are greater and dole out the ones with the highest value.
Spouses may also want to consider whether or not they should start collecting their own benefits before receiving spousal benefits later on, giving the primary worker the option to delay collecting their own benefits. Once the primary worker chooses to collect their benefits, the Social Security Administration will automatically provide the highest-value benefit to the spouse who is already collecting. This means you can keep receiving your own benefits until your spouse is ready to collect theirs. Note that you're only able to accept your own benefits or spousal benefits, but not both.
Regardless of when the primary worker chooses to collect benefits, the spouse will be eligible to receive up to 50% of their primary insurance amount. In other words, the value of spousal benefits does not change whether the primary worker collects theirs at the earliest age or waits until age 70.
Spouses may also be able to collect benefits prior to age 62 (as long as the primary worker is already collecting) if they have a child with a disability or a child under the age of 16.
Like spousal benefits, ex-spouse benefits are worth up to 50% of the primary worker's benefits and can be reduced if you start collecting them before your full retirement age.
Blair explains that there are two types of ex-spouse benefits. In order to qualify for the normal divorced spouse benefit, you must be at least age 62, single (the current marital status of the primary worker doesn't matter), must have been married to the primary worker for at least 10 years and the primary worker must also be receiving their benefits, says Blair.
Note that the independently entitled divorced spouse does not need the primary worker to be collecting benefits in order to collect auxiliary benefits based on their work record. Some of the requirements are still the same though: you must be at least age 62, single and have been married for at least 10 years. However, if your ex-spouse is also 62 years old or older and you've been divorced for two years or more, it doesn't matter if they have applied for benefits or not, says Blair, as you can still file based on their work record.
Those applying for Social Security benefits have the option of stating whether or not they've had a previous marriage that lasted at least 10 years on their application. The Social Security Administration then determines whether individuals would be eligible to receive ex-spouse benefits.
If you're not eligible for the independently entitled divorced spouse benefit and your spouse has not started collecting their own benefits, it's your responsibility to contact the Social Security Administration to see if your ex-spouse has chosen to start collecting, says Blair.
Widow's (or surviving spouse's) benefits are worth 100% of what the deceased worker was receiving, and individuals are eligible to start receiving them starting at age 60. If, however, you get married again before the age of 60, you will no longer be eligible.
Individuals can either receive their own benefits or the widow's (or surviving spouse's) benefits, but not both. Blair notes that people do have the option of collecting widow's (or surviving spouse's) benefits before switching to their own later if they are higher. For every year after full retirement age that you delay collecting monthly benefits, their value will increase 8%.
"So what Social Security allows you to do is take a lower benefit in the beginning to get a higher benefit later," says Blair.