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How Does Social Security Work For Married Couples

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Social Security And Two

Example of Claiming Social Security for Married Couples

The decades-long march of women into the nations workplaces may be the most enduring trend in the labor force and a signature of American progress.

But it is also one more reason that Social Security benefits today replace a smaller share of the lifetime earnings of married couples than they did in the past, when far fewer women worked for pay.

Other reasons include the gradual increase in the age at which U.S. workers can claim their full retirement benefits, from age 65 for the oldest retirees to 67 for Generation X. Medicare premiums are also taking more out of the monthly Social Security check, and more retirees are being taxed on a portion of their benefits over time.

But for married couples, the sharp increase in the ranks of working wives has reduced the share of their joint earnings during their working years that is replaced by Social Security when they retire. For the typical couple born in the Depression, Social Security benefits cover 45 percent of their prior earnings, but that falls to 41 percent for baby boomer couples retiring today, according to new research by the Center for Retirement Research, which supports this blog.

These Social Security replacement rates benefits as a percent of employment earnings will continue to decline, to just 37 percent for Generation X couples born between 1966 and 1975.

But the steady march of women into the labor force remains important.

How Can I Switch From My Social Security Benefit To A Spousal Benefit

Say you start collecting Social Security benefits at age 62 based on your own work history. Your spouse keeps working and delays filing until age 70. If your spousal entitlement is higher, you can switch to that. The spouse will get the maximum amount while you’ll get 50% of the amount the spouse would have received at full retirement age.

To monitor your benefits or change them, you can create an account on the Social Security site. It contains a wealth of information and it allows you to make some changes online, although others require a phone call.

What About Divorced People

The rules for divorced couples are similar to the rules for married couples with a few key exceptions.

First, in order to qualify for spousal benefits from a former spouse, you and your ex must have been married for at least 10 years. Second, you must not be remarried, though it’s OK if your ex weds again. If you’ve remarried, you’re not entitled to spousal benefits unless your current marriage ends.

If you do qualify for benefits through your former spouse, the amount you receive will not impact the amount that your ex-spouse or their new spouse can receive. Unlike married couples, divorced individuals do not have to wait for their ex-spouse to begin taking Social Security benefits before they can sign up for benefits. As long as you’re 62 or older and have been divorced for at least two years, you can begin claiming benefits on your ex-spouse’s work record, regardless of whether they have claimed their own benefits.

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How Do I Protect Myself Financially In A Second Marriage

The Guide to Money in a Second MarriageStart with Honesty. The first step to combining finances in any marriage is to have an honest discussion with your partnerideally before you get marriedabout everything related to money. Consider a Prenup. Consider the Pot System. Dont Neglect Estate Planning.

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Study: Only 1 in 300 Seniors Know These 5 Social Security ...

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Is Social Security Enough To Retire On

Social Security will replace about 40% of pre-retirement income for an average earner and financial planners usually recommend replacing about 70% to 80% of pre-retirement income. That means its essential to save for retirement by contributing to a 401 plan or funding a Roth IRA or traditional IRA.

While Social Security isnt meant to be the only source of income in retirement, thats the reality for many older Americans. About half of seniors rely on Social Security for at least 50% of their income and roughly a quarter depend on it for 90% or more, according to the Center on Budget and Policy Priorities.

Are Social Security Benefits Taxed

If you have additional income, whether its from a job or investments, theres a good chance at least part of your Social Security will be taxed. Heres how it breaks down.

If youre a single filer:

  • 0% of your benefit is taxable if your income is below $25,000.
  • Up to 50% of your benefit is taxable if your income is between $25,000 and $34,000.
  • Up to 85% of your benefit is taxable if your income is above $34,000.

If youre married filing jointly:

  • 0% of your benefit is taxable if your combined incomes are below $32,000.
  • 50% of your benefit is taxable if your combined incomes are between $32,000 and $44,000.
  • 85% of your benefit is taxable if your combined incomes are above $44,000.

Keep in mind that taxable doesnt mean thats what you pay in tax. Suppose youre a single filer with $30,000 of income: $20,000 from Social Security benefits and $10,000 from 401 withdrawals.

That simply means that your income will be $20,000 in the eyes of the IRS: $10,000 from the 401, plus 50% of the $20,000 from your Social Security benefits. Uncle Sam cant touch the remaining 50%.

Of course, if youre still working and saving for your retirement, heres where well give a shoutout to Roth IRAs and Roth 401s. By forgoing the tax break during your working years, you get tax-free income in your retirement years income that doesnt count against you for Social Security purposes.

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What Needs To Be Done After Getting Married

What do I need to update after getting married?Your Social Security card. If youve changed your name, this should be your first stop. Your drivers license. Your credit union/bank account information. Your payroll information. Your life insurance and retirement accounts. Your insurance policies. Your creditors.Jul 7, 2020

Social Security Benefits Available To Married Couples

Social Security: 10 Things Married Couples Need to Know

Worker Benefits

Members of a married couple are each entitled to Social Security benefits based upon their own work records . This benefit, at Full Retirement Age,1 is known as the Primary Insurance Amount . The earliest an individual can file for a worker benefit is age 62, but actuarial reductions apply if it is taken prior to Full Retirement Age. If the benefit is taken after Full Retirement Age, Delayed Retirement Credits2 apply.

Spousal Benefits

The lower-earning spouse may also be entitled to Social Security benefits based upon the other spouses work record . The spousal benefit is calculated as the greater of the individuals own worker benefit at Full Retirement Age, or one-half of the spouses worker benefit at Full Retirement Age. To see how the numbers work, lets assume that Ken is eligible for a worker benefit of $2,000 per month at his Full Retirement Age of 66 and 8 months . Kens wife Mary is eligible for her own worker benefit of $600 per month at her Full Retirement Age of 66 and 8 months . One-half of Kens PIA minus Marys PIA leaves Mary eligible for an additional $400 in the form of a spousal benefit. If Ken and Mary filed at age 66 and 8 months, Ken would receive $2,000 and Mary would receive $1,000. Marys $1,000 might be thought of as a spousal benefit, but it really is made up of two parts, her own worker benefit and her spousal benefit .

Survivor Benefits

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Strategies For Maximizing Spousal Benefits

Every married couple has to figure out the best way to maximize their benefits depending on their own circumstances.

The three strategies below will help you make the most of your Social Security spousal benefits, depending on your circumstances. However, keep in mind that, regardless of your circumstances, the most a spouse can get is 50% of the amount that the higher-earning partner is entitled to at full retirement age.

Is There A Maximum Social Security Benefit For Married Couples

There is a Social Security maximum benefit for married couple applicants that enrollees need to review. Generally, this is referred to as the family maximum benefit. This term describes the maximum benefits that families can receive from a single individuals work history. In addition to spousal benefits, this amount also takes into account survivor and disability benefits that come from an individual. Depending on the situation, families maximum Social Security benefits can vary. Usually, the amount of benefits a household can collect is between 150 and 180 percent of the full retirement benefits for the worker.

This site is not affiliated with the SSA or any other government services.

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Special Rules For The Divorced

Divorced people whose marriages lasted at least 10 years and who are currently unmarried also can apply for spousal benefits if theyre 62 or older and their exes are receiving their own benefits.

If your ex is not receiving benefits, you can still apply if both you and your ex are at least 62 and the marriage ended at least two years earlier.

Also, if youre divorced, your spousal benefit is based on the amount your ex would receive at his or her full retirement age. It doesnt matter if your ex actually starts early or late.

More than one ex can receive a spousal benefit based on a workers earnings, by the way, as long as each marriage lasted at least 10 years. Divorced spousal benefits dont reduce the workers benefit or the current spouses benefit, and you dont have to talk to or coordinate with your ex to receive divorced spousal benefits.

Once your ex dies, you can qualify for a divorced survivor benefit of up to 100% of the amount your ex received.

With You Through Lifes Journey

Study: Only 1 in 300 Seniors Know These 5 Social Security ...

Social Security touches the life of every American, both directly and indirectly. We help older Americans, workers who become disabled, wounded warriors, and families in which a spouse or parent dies. Our commitment also extends to lesbian, gay, bisexual, and transgender individuals covered by Social Securitys many programs and services.

Today, about 176 million people work and pay Social Security taxes, and about 65 million people receive monthly Social Security benefits. With retirement, disability, and survivors benefits, we improve the quality of life for millions throughout lifes journey.

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How Social Security Is Calculated

You can start Social Security as early as age 62, although researchers have found that most people are better off waiting at least until their full retirement ages. Each year you delay could add up to 8% to your benefit until age 70, when benefits max out. Most people will live beyond the break-even age, when the larger checks from delaying more than make up for the smaller checks they passed up.

Typically, one member of a couple needs to be receiving Social Security before the other can apply for spousal benefits. Social Security will calculate your own retirement benefit, based on your 35 highest-earning years, and then calculate your spousal benefit, based on your partners 35 highest-earning years. If your spousal benefit is greater, Social Security will pay you your benefit first and then add the amount necessary to match your spousal benefit.

In other words, both benefits are compared and you get the larger of the two amounts. This is why you typically cant switch from a spousal benefit to your own later, because youre already receiving your own . There are a few exceptions, which are covered below.

Social Security spousal benefits dont reduce the higher earners benefit. Spousal benefits may, however, be sharply reduced if either person starts early.

How Does Marriage Affect Retirement

En español | Marriage has no impact on your Social Security retirement benefit, which is based on your work record and earnings history. You and your spouse, assuming he or she also qualifies for retirement benefits, each collect your own separate benefits, and the amounts do not limit or otherwise affect each other.

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Were With You From Birth

Most parents apply for a childs Social Security number at birth, usually through the hospital. When the time comes for that first job, the number is already in place.

We can place both parents names on your childs Social Security number record. You will need to provide proof that you are the legal parents of the child.

For more information, read . You can also view all our publications .

A fun bonus of assigning Social Security numbers at birth is that we know the , which we announce each year. On our website, you can find the top baby names for the last 100 years.

How Can Married Couples Maximize Their Combined Benefits

Social Security Hack for Married Couples | Social Security Spousal Benefits

While seniors can’t rely on Social Security alone, they still can take steps to maximize their benefits. For couples, this often means coordinating to decide on the most effective claiming strategy.

In some cases, the ideal is for both spouses to wait until age 70 to file for benefits. This is a good strategy when both spouses qualify for Social Security on their own work records and have similar incomes. They can each maximize their benefit by earning the maximum delayed retirement credits, thus earning the largest combined household income from Social Security.

But there are other techniques as well. Sometimes, lower-earning spouses should claim benefits early to enable higher-earning spouses to delay as long as possible. Once the higher-earning spouses start getting checks, the lower earners can switch over to getting spousal benefits if they’re higher than the amount based on their own earnings history.

You can’t collect both your own benefit and your spousal benefit at the same time, though. Nor can you file for spousal benefits and delay getting your own checks until your full retirement age, as you’re considered to be filing for all benefits you’re eligible for once you request that your checks start.

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Who Pays For Social Security

You do, taxpayer. So does your employer.

Social Security is funded via payroll taxes, which are also sometimes referred to as FICA taxes.

Most workers have 7.65% of their paychecks automatically deducted for FICA taxes. Your earnings are taxed at 6.2% for the first $142,800 of earnings as of 2021. Anything you earn above that isnt taxed for Social Security which is why $142,800 is the maximum amount considered for calculating your benefits.

The remaining 1.45% goes toward Medicare, but for that theres no salary cap. In fact, individuals who earn above $200,000 and married couples making more than $250,000 get hit with an extra 0.9% Medicare tax.

Your employer matches your 7.65% contribution toward Social Security and Medicare. That means self-employed people pay 15.3% because they have to make both the employee and employer contributions.

Can You Work And Claim Social Security Benefits

If youve already reached full retirement age, feel free to work away if you choose. Your benefits wont be affected no matter how much you earn.

But if you take Social Security early, your benefits will be reduced by $1 for every $2 you earn above $18,960 in 2021. You get more leeway during the year you reach full retirement age: Youll have $1 withheld for every $3 you earn above $50,520, and then once you actually hit that age, your benefits will no longer be reduced.

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Get Your Social Security Estimates

The SSA website provides estimates for how much you’ll collect if you start receiving benefits at age 62, your full retirement age , and age 70. Remember that you don’t have to start taking your benefits at those milestone ages you and your spouse can start collecting anytime between ages 62 and 70.

Strategy For Divorced Spouses

Social Security: 10 Things Married Couples Need to Know

If you have been divorced for at least two years, you can apply for spousal benefits if your marriage lasted 10 or more years. If, on the other hand, you are still married and considering a divorce, and are near retirement age, try to apply for spousal benefits before your divorce is final. If you have been married and divorced multiple times, you can choose to receive whichever spousal benefit is highest. Saving your ex-spouses Social Security numbers and dates of birth will make the enrollment process easier.

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