What to know about Social Security spousal benefits strategies

For workers who have paid into the Social Security system for years through payroll taxes, a reward comes when they reach the program's retirement age and they can start collecting monthly benefits for life. But the program also provides a payout to eligible spouses even if they never worked outside the home.

In fact, developing a Social Security spousal benefits strategy is an important way for couples to manage their post-retirement finances and maintain a comfortable standard of living.

Here are answers to some frequently asked questions about these benefits so you can create a plan that maximizes your potential household income.

The Social Security Administration (SSA) pays a monthly benefit to adults age 62 or older based on the annual earnings they accrued during their working years. The SSA indexes these earnings, meaning it averages out a person's highest annual earnings for up to 35 working years. The program uses this information to calculate a primary insurance amount (PIA )that will become the basis for their benefit amount.

You can also receive a monthly payout based on your partner's PIA, even if you've never worked a job where you had Social Security taxes withheld. As long as your spouse is already receiving benefits under the program and you meet the other eligibility criteria (detailed under the next question), you can receive this important income support.

As with other Social Security retirement benefits, you can start receiving spousal payments through the program as early as age 62. However, you get a larger monthly benefit if you wait until your normal retirement age—that threshold is between ages 66 and 67 depending on the year of your birth.

Benefits are available to spouses married for one year or longer. To qualify, you also have to be at least 62 years old and have a spouse who is currently receiving benefits based on their indexed wages. You can also receive a spousal benefit at any age if you're caring for the child of a Social Security recipient and the child is younger than 16 or became disabled before age 22.

Ex-spouses can also receive these benefits after a divorce if the insured spouse is eligible for retirement or disability benefits through Social Security, the marriage lasted at least 10 years, and the ex-spouse is both unmarried and at least 62 years of age. If you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two continuous years.

The SSA recognizes same-sex marriages in all 50 states as well as certain nonmarital relationships, including civil unions and domestic partnerships. Therefore, same-sex couples and others in these legal relationships are able to receive spousal benefits.

Note that Social Security uses a separate payout calculation for widowed spouses. For that, you'll need to apply for survivor benefits instead of spousal benefits. If your married partner recently passed away, it's important to notify the SSA immediately so you can receive the proper benefit.

Being divorced doesn't necessarily mean you lose spousal support from Social Security. To make a claim, your former spouse has to be eligible for benefits and your marriage needs to have lasted 10 years or longer. In addition, you have to be unmarried to receive the spousal benefit. It's important to note that the marital status of the insured individual doesn't factor into your eligibility.

In cases where your ex-spouse has not started to collect benefits but qualifies to do so, you can apply for a spousal benefit as long as you've been divorced for at least two consecutive years.

When you are the spouse of an insured individual—one who has worked and paid into the Social Security system—the maximum amount you can receive is half of their benefit. However, you only receive 50% of their benefit if you wait until your full retirement age to receive benefits. If you start receiving benefits between age 62 and your full retirement age, the spousal benefit is reduced on a proportional basis.

For example, an insured individual born after 1960 would receive 70% of their SSA-calculated benefit if they applied for benefits at age 62—and their spouse would receive 32.5% of their benefit. If the primary recipient started receiving payments at age 65, they'd get 86.7% of their calculated benefit and their spouse would be eligible to collect 41.7% of that amount.

Keep in mind that any spousal payment you receive doesn't affect the insured spouse's Social Security retirement benefit.

What happens if you have Social Security earnings of your own but you also qualify for a spousal benefit? You can actually apply for both at the same time—something the SSA calls a "deemed filing." You'll then receive the higher of the two amounts.

Suppose you're at full retirement age and qualify for a $1,800 monthly benefit based on your pre-retirement wages. If you also qualify for a $1,000 spousal benefit, you'd receive the $1,800 benefit amount since that's higher.

Your own retirement benefits will continue to grow the longer you delay your claim, up to age 70. If you wait until 70 to start collecting Social Security income, you can accrue enough delayed retirement credits to increase your benefit up to 32% versus claiming at full retirement age. It used to be fairly common for retirees to take advantage of this feature—claiming spousal benefits while delaying their own retirement benefit so it continues to grow. They would then switch from the spousal benefit to their own retirement benefit after maxing out the latter.

The Bipartisan Budget Act of 2015 clamped down on this strategy, however. Those who turned 62 on or after January 2, 2016, and were eligible for both benefits were thereafter required to complete a deemed filing. While there's still an incentive to hold off and let your delayed retirement credits grow, you can no longer stagger your application for each benefit.

Your insured spouse may see a reduced benefit if they continue to work—and that, in turn, could affect your benefit as well. But what if you receive spousal benefits and you still work? Continuing to receive employment income does not affect the spousal benefit itself.

You can use the SSA's Retirement Earnings Test Calculator to determine whether their projected earnings will impact their retirement benefit. For 2023, the earnings limit for those under full retirement age is $21,240. They would receive $1 less in retirement benefits for every $2 they earn above that threshold.

You can apply when your insured spouse files for Social Security or at any time after they've started to receive monthly payments. Going online and filling out the Retirement/Medicare Benefit Application is the easiest way for most applicants. When you and your spouse apply online at the same time, the SSA automatically checks your eligibility for spousal benefits.

When applying online, you may be asked for certain documents, including but not limited to:

• Your birth certificate or other proof of birth
• Proof of U.S. citizenship or lawful alien status
• A copy of your U.S. military service papers
• A copy of any W-2 forms or a self-employment tax return for the prior year
• Marriage certificate
• Divorce degree

If you can't complete the online application, you can also make an appointment at your nearest Social Security office or call (800) 772-1213.

Any number of factors—from your application date to your current earnings from work—could affect your household's total Social Security benefit. Here are some factors to consider when creating a Social Security spousal benefits strategy:

• Your spousal benefit is based on your insured spouse's PIA. This means the date they formally apply for their own benefits doesn't affect your Social Security payment.

• However, the timing behind when you, as a spouse, applies does matter. Delaying spousal benefits until you reach your full retirement age will generally increase your monthly payment. Therefore, it often makes sense to wait, unless you really need the extra income now.

• If you turned 62 after 2015, you can no longer claim spousal benefits while your own retirement benefit grows. You now need to file for both at the same time, which provides a bigger incentive to avoid taking early benefits.

• You may be eligible for spousal benefits even if you're divorced. As long as you're unmarried and meet the other criteria, you still have access to this important financial resource.

Claiming Social Security at the right time and in the right way can help ensure you have enough income to live comfortably after leaving the workforce. A Thrivent financial advisor in your area can explain how spousal benefits work and help you develop a financial strategy to maximize your Social Security benefits.