The lowdown on Social Security spousal benefits

401(K) 2012/Flickr

(MoneyWatch) Married couples should familiarize themselves with the retirement benefits under Social Security that are available to spouses.

What benefits are available to a nonworking spouse when both spouses have reached their normal retirement age but the spouse with the higher earnings history continues to work and delays collecting his social security retirement benefits?

A nonworking spouse is typically entitled to 50 percent of the working spouse's benefit, but it is the working spouse who must file for this benefit if it is to be collected.

However, the working spouse may want to delay filing to minimize taxable income and maximize Social Security benefits by receiving them later.

In this case, the working spouse can "file and suspend" those benefits, allowing the other spouse to also receive them. Here's how it works:

A working husband files for his benefits at full retirement age, and his spouse (with little or no earnings history) files for her spousal benefits.

The husband's request to file also includes an immediate request to suspend his benefits. By doing this, his wife can begin to receive her spousal benefits.

Later, ideally at age 70, the husband can claim his benefits when the monthly amount is larger.

This strategy works best when one person, the husband in this case, has a higher earnings history and the spouse, who has had little or no earnings, is the younger of the two. Also, waiting beyond full retirement age to file and suspend does not provide any advantage, as spousal benefits are not increased by delayed retirement .

For some, filing to activate spousal benefits and then suspending their own benefits to delay access to them makes sense: Delayed retirement benefits increase by 8 percent for each year their receipt is delayed after the normal retirement age and up to age 70. As there is no additional increase after age 70, there is no reason to wait any longer to file. Of course, your life expectancy will impact your decision.

Spousal benefits are automatically available to divorced persons when they have been married for at least 10 years. As long as they have been divorced for at least two years, one party may claim spousal benefits, as determined by the other's earning history, without the second party's having to file for their own.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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