Millions of Americans qualify for Social Security by working and paying into the system throughout their careers. Since Social Security is primarily funded by payroll taxes, it takes a certain amount of earnings to be able to get benefits in retirement.
To be eligible for Social Security, you’ll need to accumulate 40 work credits in your lifetime and can rack up a maximum of four credits per year. The value of a single work credit, however, changes from one year to the next.
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Currently, it takes $1,810 in earnings to snag a single work credit. Last year, however, it only took $1,730.
The amount of earnings it takes to get yourself a Social Security work credit tends to rise annually in accordance with wage growth. Once you’ve earned work credits, you don’t lose them — even if you take an extended break from the labor force or switch jobs.
You’d think it would be pretty easy to qualify for Social Security based on all of this since you really only need 10 years of part-time work to get benefits. However, some people don’t manage to earn enough to qualify for Social Security on their own.
If you’re married and never worked, you may be aware that you’re entitled to Social Security in the form of spousal benefits, which allow you to receive benefits based on your spouse’s earnings record. But Social Security spousal benefits work differently than the benefits you earn based on your own wages, and it’s important to understand the nuances involved so you don’t lose out.
How Social Security spousal benefits work
With Social Security spousal benefits, you’re eligible for up to 50% of your spouse’s monthly benefit at their full retirement age. If your spouse’s benefit at full retirement age is $3,000, you can collect $1,500 from Social Security as a spouse, provided you wait until your own full retirement age to file.
You may end up with less money from your Social Security spousal benefits if you file early, though. You can claim those benefits as early as age 62, which is also the earliest age to file for benefits, based on your own earnings record. But filing before reaching full retirement age means reducing your monthly benefits for life, whether they’re spousal benefits or your own benefits.
Don’t make this big mistake when claiming Social Security spousal benefits
It’s natural to want to get as much money as possible out of Social Security in retirement, whether you’re claiming benefits based on your own wage history or as a spouse. But there’s no sense in delaying your claim for Social Security spousal benefits past your full retirement age.
When you’re filing for Social Security based on your own wage history, your benefits can grow 8% for each year you delay your claim past full retirement age, up until age 70. However, Social Security spousal benefits aren’t eligible for delayed retirement credits. This means that the most money you can walk away with is 50% of the amount your spouse gets at their full retirement age.
If you delay your claim for Social Security spousal benefits, all you’ll do is deny yourself income you could’ve had sooner. As a result, it’s important not to fall victim to this misconception.
All told, the rules of Social Security spousal benefits can be a bit complex. If you’re planning to claim them, do some reading ahead of retirement so you understand how they work.
