3 Things Every Spouse Must Know About Social Security

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Social Security plays a vital role not just for American workers but also for their families. More than 59 million Americans will receive Social Security benefits in 2014, and of those, more than 11 million are spouses, survivors and dependents eligible to claim benefits. Because spousal and survivors benefits are so important, every spouse needs to understand how those benefits work and how much Social Security will pay when the time comes. Here are three of the key things you should know about what you're entitled to receive under Social Security as a spouse.

1. How Much Will You Get From Social Security as a Spouse?

The simple rule for spousal benefits is that if you retire at full retirement age, which is currently 66, you'll receive half of your spouse's full benefit amount. Unfortunately, though, you typically can't just take what your spouse receives from Social Security and divide it by two to figure out what you'll get. That's because your spousal benefit is calculated on what your spouse would receive based on retiring at full retirement age, not what your spouse actually receives. Unless your spouse started taking benefits exactly at your spouse's full retirement age, then your amount will differ.

Moreover, if you retire earlier than 66, you'll get less than you would if you waited. If you retire at the earliest opportunity, at age 62, then you'll only get 35 percent of your spouse's full benefit amount as a spousal benefit rather than 50 percent. At 63, you'd get 37.5 percent, 41.7 percent at 64, and 45.8 percent at 65.

Things get even more complicated if you have your own work history. In that case, you're entitled to Social Security benefits of your own and spousal benefits. If you take Social Security before full retirement age, then you'll receive either your calculated spousal benefit or your own benefit, whichever is greater. But if you wait until full retirement age, you have more choices, including filing a restricted application to take spousal benefits only. That can let your own benefits grow, potentially giving you more in lifetime payouts from Social Security. At the same time, though, if you had a government job and receive a pension outside Social Security, what you receive in spousal benefits can end up reduced by as much as two-thirds of the pension amount because of what's known as the government pension offset.

2. What Happens When Your Spouse Dies?

What Social Security calls spousal benefits refers specifically to benefits you receive while your spouse is still alive. After your spouse's death, you're entitled to survivors benefits, and they're calculated differently.

Generally, survivors at full retirement age receive 100 percent of what their spouses got in benefits. But here, that amount is adjusted for when your spouse started taking benefits, giving you extra money if your spouse waited beyond full retirement age or less money if your spouse took Social Security early. Moreover, if you take survivors benefits early, you'll get a reduced amount -- as little as 71.5 percent if you claim at 60, the earliest available age for most widows and widowers.

Rules governing remarriage also make things tricky. If your spouse dies and you remarry before age 60, then you lose the right to survivors benefits as long as you're married. But after age 60, you can remarry and still qualify for survivors benefits.

Again, having your own work history requires you to consider strategies to maximize both your benefit and your survivors benefit. With survivors benefits, there are more opportunities to claim them while preserving your own benefit until later, and as with spousal benefits, that can potentially increase the total amount you receive from Social Security over the course of your lifetime.

3. Can Divorced Spouses Get Social Security Benefits?

Couples who divorce often worry that they're putting their Social Security benefits at risk. But Social Security treats many divorced spouses the same way as current spouses.

Specifically, if you were married for 10 years or more and don't remarry, then you're entitled to claim spousal benefits the same as if you were still married. Your ex-spouse can remarry without affecting your benefits at all, and your claim has no impact on the benefits your ex-spouse and his or her dependents are entitled to receive. Divorced spouses are also entitled to receive survivors benefits, so once your ex passes away, your benefit might rise.

Social Security is more complex than many believe, and the benefits that spouses can receive are particularly intricate. By knowing the basics, though, you'll put yourself in a better position to get every penny of Social Security you deserve.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+. Motley Fool retirement experts offer a free report on a simple strategy to take advantage of a little-known IRS rule to boost your retirement income.
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