This article takes a look at 5 social security spousal benefits and loopholes you need to know now. If you wish to check out our detailed analysis on navigating social security, you may go to 14 Social Security Spousal Benefits and Loopholes You Need to Know Now.
5. Claiming Survivor Benefits Before FRA
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Since a worker can claim survivor benefits even before the Full Retirement Age, they are seemingly at an advantage. This is because a survivor can collect benefits for a longer period. While this is certainly a social security feature to talk about, the disadvantage is that the survivor will be collecting reduced benefits. It’s essential for individuals to carefully consider the timing of their benefit claims based on their financial situation and life expectancy, as claiming early may result in a lower monthly benefit but a longer total period of benefit receipt. Conversely, delaying the claim could lead to higher monthly benefits if the survivor waits until after FRA.
4. Special Lump-Sum Death Payment
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A Social Security Lump Sum Death Payment (LSDP) is funded and managed by the SSA. Provided a surviving spouse or child meets certain requirements, they are eligible to receive a special lump-sum death payment of $255, as noted by Benefits.gov.
3. Deemed Filing
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Deemed filing mandates that when applying for either your retirement or your spouse’s benefit, you are automatically considered to be applying for both. The Bipartisan Budget Act extends these rules to encompass full retirement age and beyond. The change aims to maintain fairness in benefit incentives. Deemed filing rules specifically impact retirement benefits only, and survivor’s benefits remain unaffected. For widows or widowers, there’s autonomy to commence survivor benefits independently, distinct from the retirement benefit. Exceptions to deemed filing exist in certain scenarios. For instance, it doesn’t apply if you’re receiving spouse’s benefits and are also eligible for disability benefits. Additionally, the rule doesn’t come into play if you’re receiving spousal benefits due to your role as the caregiver for the child of the retired worker.
2. Spousal IRA Contributions
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If a spouse has limited or no income, Spousal IRA contributions can help a working spouse contribute to an individual retirement account (IRA) in the name of their non-working partner. Whether opting for a Traditional or Roth IRA, this allows couples to maximize their contributions, potentially reaching up to $14,000 or more annually. The significant advantage lies in supporting the non-working spouse’s retirement savings during periods out of the workforce, such as when raising children.
1. Spousal Coordination of Benefits
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A married couple often has a partner with a higher pay and the other one with a lower pay or none at all. In such cases, combining retirement and spousal benefits, and optimizing them, can ensure that couples can maximize their benefits. For instance, you won’t be able to receive a spousal benefit if your retirement benefit surpasses it. Social Security disburses the higher of the two benefits when an individual qualifies for both. Therefore, couples must stay informed about their anticipated future benefits across different claiming ages.
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