Are you a stay-at-home mom (SAHM) or dad with a working spouse or partner? Then you need to know how to benefit from a Social Security provision that not too many people are familiar with.
Read more: 10 things to know about Social Security in 2017
Here’s what you need to know about the spousal benefit
When a spouse decides to stay home to raise children, their income can be severely limited. But that doesn’t mean their retirement has to be compromised.
Married people with a scant earnings history — or even no earnings history at all — can qualify for what’s called the spousal benefit.
Basically, the Social Security Administration lets homemakers claim a retirement benefit that’s equal to half of the Social Security benefit their spouse would receive at full retirement age (FRA).
There are, of course, a few caveats to keep in mind.
You must be 62. Yet FRA is 66 or 67 for most people. So if you choose to take your spousal benefit at 62, you’ll only get 70% of the benefit you would get at your FRA of either 66 or 67.
Two’s a crowd
Only one of you in a couple can claim the spousal benefit.
No double dipping!
That is, you can’t claim your own Social Security benefit and half of your spouse’s.
Your spouse’s work status matters
A new policy went into effect May 1, 2016 that states your spouse must be receiving their Social Security benefit in order for you to take the spousal benefit.
That’s different than in past years, when the “file and suspend” approach was in full effect. So unless you’re grandfathered in under those old rules, your spouse must be taking his or her own benefits for you to claim the spousal benefit.
When you tied the knot matters too
You must be married for at least 12 months to claim the spousal benefit.
Don’t earn too much or you’ll lose out — at least temporarily
If you’re still working and you elect to take the spousal benefit before your FRA, you may have to settle for less — at least for now.
Here’s how this works: You’re penalized with a $1 reduction in benefits for every $2 you earn above a limit of $16,920 annually.
Now for the good news: Any money that’s taken away will be repaid back to you via your monthly benefit when you either stop working or reach your FRA.
Divorcees can claim the spousal benefit
As long as your marriage lasted 10 years and you’ve been divorced for two years, you too can claim the spousal benefit.
Here are a few additional things to keep in mind: Both you and your ex-spouse must be at least 62. And if you’re married again when you apply, you will be denied the spousal benefit from your prior marriage.
Widows and widowers can claim on their late spouse’s benefit
If you’re 60 and your marriage to your late spouse lasted at least nine months, then the following applies to you:
Instead of receiving half of your deceased spouse’s Social Security, you can get 100% of their earned benefit when you file at your FRA.
This is a rare example of a time when you claim a Social Security benefit of any kind before 62!