All hands on deck! This was the call aboard a ship to get everyone to their stations to make sure the vessel made it through choppy water. Everyone would come from their naps or card games or meals and get to work, knowing that the only way they’d survive is if everyone did their part.
Family life can feel the same way, especially in a marriage. In order for a marriage to survive, for a family stay coherent and functional, everyone has to do their part. All hands have to be on the proverbial deck, in one way or another, for the boat to stay afloat.
In providing spousal benefits, Social Security tries to recognize that the ship didn’t have only one sailor – that the system never gets paid into if there aren’t spouses (and other family) to support the workers. That, to extend our metaphor, the captain is only as good as his/her first mate, and it really is all hands on deck.
Let’s explore how spousal benefits for Social Security work for the whole ship’s crew, even in the more complex aspects of divorce and survivorship.
Social Security Spousal Benefits
John and Susan are married. John finds success as a salesman, which allows Susan to be a stay-at-home-mom. As much as Susan would like to pursue her passion as a painter, she finds herself as a full-time child-tender until she’s in her mid-fifties.
The outcome: even if Susan starts working when she’s able, she’s missed out on most of her earning years. Most likely, with age-related health issues, she won’t be able to work long enough to earn her full forty credits for her social security coverage.
What’s to be done? John and Susan will have a hard time surviving on John’s $1500/month check. They saved all they could, but it’s still difficult to make ends meet. Susan would have worked if she could have, but anyone with kids will tell you that it’s a full-time job and then some.
Here the spousal benefit kicks in. In recognition of the need for survival income and impossibility of Susan working during her “mom years,” Social Security has a built in spousal benefit of 50 percent of the working spouse’s monthly benefit. In our scenario, that means Susan would get a well-earned $750/month to supplement John’s benefit check.
If Susan is able to spend a few happy years painting and pay into the system, she may be entitled to Social Security benefits of her own. In that case, she will receive whichever benefit is higher as her monthly benefit. If she earned enough credits to get a benefit of $600 a month, but John’s working record allows for $750/month, she would receive the latter (not both).
The parameters for spousal benefits are:
- The person claiming the spousal benefits must be 62 or older.
- his/her spouse must be eligible to receive benefits.
- his/her spouse must have already filed to receive those benefits.
Essentially, once the working spouse is eligible, then everyone is. The only exception here is the “suspend and file” loophole, in which the working spouse files for benefits so that the other can, but “suspends” their benefits until a later time. This loophole is becoming more difficult to take advantage of in recent years.
If the crew outlives the captain, or if Susan survives John, then survivorship benefits become the question in Social Security. The logic is the same. Susan may not have been working through the 80s and 90s, but she supported John while he did, and so has rights to the money their family paid into the system.
This logic also extends to dependent family members in the case of survivorship. Those who have no means of income themselves and were living dependent on a worker who paid into the system, are also covered by benefits.
This lays out as follows:
- A widow or widower usually receives 100 percent of the deceased person’s benefits if the survivor is full retirement age
- The surviving spouse can also take reduced benefits as early as 60 (or 50 if disabled) and receive between 71.5 to 99 percent of the worker’s benefit
- If taking care of children under age 18, the surviving spouse can receive 75 percent of the deceased’s benefits
- Benefits can be paid to children at any age if they were disabled before 22
- Benefits can be paid to unmarried children under age 18 (75 percent of benefit)
- Dependent parents
- If a parent is dependent on the deceased for at least 50 percent of their livelihood, they can receive survivor benefits.
Again, those who are dependent on – or supporting – a worker who paid into the system are usually entitled to some benefit. Also, if that person is already receiving Social Security, then they will receive the higher of the two monthly payments.
Let’s say Susan and John, sometime later in life, grow apart and eventually divorce. This is not an uncommon circumstance by any measure and can happen for any number of reasons. But it doesn’t change the fact that Susan still supported John during the marriage and wasn’t able to pay into the system herself during that time.
Because current marital circumstances don’t change the past, Social Security has contingencies for the divorced spouse as well. The guidelines are as follows:
- If your marriage lasted ten years or longer
- You are unmarried
- You are at least age 62
- Your ex-spouse is entitled to Social Security retirement/disability benefits
Just as in the case of spousal benefits, your monthly check would be 50 percent of your ex-spouse’s benefits.
The good news here is that your ex-spouse’s marital status doesn’t affect your benefit at all, as it is based on money paid into the system in the past. Your benefit doesn’t affect the ex’s benefit in any way and is available no matter the circumstances of the divorce.
In the case of survivorship, the benefits are similar. If your marriage lasted ten years, and you meet the requirements delineated above, you will receive benefits if your ex-spouse dies. If you get re-married after age sixty, your marital status will not affect the benefit amount. Finally, if you are caring for your ex’s child (biological or legally adopted) under age 16, you would receive the benefit, without having to meet the length-of-marriage rule.
All Hands on Deck – The Basics
The Social Security system was set into place after the devastation caused by the Great Depression, to provide relief for those who had couldn’t provide it for themselves. Built into the system is the recognition that workers aren’t simply free agents that pay into the system but have a complex interworking of relationships in their own lives.
Keep in mind that Social Security spousal benefits in any form will only be 50 percent of the value of the worker’s benefit – enough to help, not enough to live on. Also, keep in mind, if you have paid into the system yourself, your check will consist of whichever is the higher payment.
Finally, talking these and any money issues over with a financial advisor can provide insight and perspective. At Atlas, our goal is to simplify the wealth process so that you and your family can enjoy the benefits you’ve earned and live your best life today.