Claiming Social Security Spousal Benefits? Don't Make This Big Mistake

Generally speaking, older Americans become eligible for Social Security after working for at least 10 years and paying into the system. But it's possible to collect Social Security in retirement even if you never worked a day in your life. Thanks to the program's spousal benefits, you may be eligible to get paid each month in retirement based on a current or even a former spouse's record.

But if you're going to claim spousal benefits from Social Security, it's important to understand how they work. It's equally important to avoid one big mistake that could leave you with a world of regret.

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Know when to sign up for spousal benefits

Some people confuse Social Security spousal and survivor benefits. Survivor benefits are those that apply once a spouse passes away, and they equal 100% of the amount your spouse was collecting prior to their passing.

Spousal benefits, in contrast, max out at 50% of what your spouse (or ex-spouse) collects at full retirement age. If that amount is $2,400, then your spousal benefit could be worth up to $1,200, but not more.

Here's why that's important. If you file for spousal benefits before reaching your full retirement age, you'll reduce them in the process. (The earliest age to claim spousal benefits is 62.) But if you delay your spousal benefit claim beyond your full retirement age, you won't get any financial upside.

It's possible to accrue delayed retirement credits that boost your monthly benefit up until age 70 when you're claiming Social Security on your own earnings record. But those credits don't apply to spousal benefits.

Put another way, if you're eligible for your maximum Social Security spousal benefit at your full retirement age of 67, you won't get any more money by waiting until age 70 to sign up. All you'll do in that situation is deny yourself money in the form of benefits you could've had sooner. So the latest point at which you should claim spousal benefits is full retirement age, period.

It's important to understand the rules

Social Security is a complex program, and spousal benefits are a particularly complicated topic to dive into.

That's why it's so important to spend time reading up on Social Security ahead of retirement. The more information you arm yourself with, the less likely you'll be to make a mistake in the context of filing for benefits -- whether you're claiming them on your own earnings record or based on that of a current or former spouse.

Another thing you may want to do if you're married is sit down with a financial advisor to discuss a Social Security filing strategy. There can be benefits to having your spouse delay their Social Security claim -- namely, accruing the delayed retirement credits discussed above. But that could also put you in a position where you have to wait to collect spousal benefits. So you may want to get some outside help running the numbers and seeing what makes the most financial sense for both of you.

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