Social Security Spousal Benefits Could Be Headed for a Big Increase: What Married Retirees Need to Know
Spousal Social Security benefits have long been considered the lesser deal for married retirees, but a shift is coming that could change how much that monthly check is worth and whether working in retirement makes more financial sense than you…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Many people earn Social Security by working and paying taxes on their wages. Anyone who accumulates 40 work credits in their lifetime can qualify for Social Security benefits in retirement. The value of credits changes yearly, and up to four credits per calendar year can be earned.
For those who don’t qualify for Social Security based on their own earnings, spousal benefits may be available. People who are married to seniors who are eligible for Social Security can often claim benefits on their spouses’ records. And eligible divorcees can get spousal benefits, too.
The problem with spousal benefits, though, is that they’re not as generous as benefits earned directly. Spousal benefits max out at 50% of a qualifying spouse’s full retirement age benefit.
For someone eligible for a $2,000 benefit based on their own record, the associated spousal benefit would have a maximum value of $1,000. And while spousal benefits can be reduced for being claimed prior to full retirement age, they also can’t get a boost for a delayed claim. That’s different from benefits earned directly, which are eligible for delayed retirement credits until age 70.
The good news, though, is that Social Security spousal benefits may be headed for a big increase in 2027. Here’s why.
A generous COLA could boost spousal benefit payments
Social Security benefits are eligible for a cost-of-living adjustment, or COLA, every year. The purpose of COLAs is to help benefits keep pace with inflation.
It’s too soon to know what 2027’s COLA will amount to exactly. That number is calculated based on third quarter inflation data, and a lot of that puzzle is still missing.
But based on recent estimates, it’s looking as though Social Security benefits could receive a COLA between 3.4% to 3.6% in the new year. And COLAs apply to spousal benefits, too.
The average spousal benefit today is about $987. If next year’s COLA is 3.4%, it will add about $33.50 to the typical spousal benefit. If the COLA comes in a bit higher at 3.6%, it will add $35.50.
Even if next year’s COLA ends up being a bit smaller than the lower end of the range above, it will likely push the average Social Security spousal benefit above the $1,000 mark. That’s a win for seniors who need that money to cover their expenses.
Don’t just rely on spousal benefits
While Social Security’s spousal benefits can be instrumental in helping people without a robust earnings history manage their bills in retirement, those payments are typically modest at best. So it’s important to have other income streams to rely on, whether it’s savings, investments, or earnings from part-time work.
In fact, spousal benefit recipients who work in retirement might eventually qualify for Social Security on their own. In that situation, Social Security pays the highest benefit available.
If someone’s benefit based on their own wage history is $1,100 a month and their spousal benefit is $1,000, they’ll get the $1,100. But if the opposite is true, the spousal benefit would be payable. This means there’s extra incentive to hold down a job in retirement, since it could lead to larger monthly checks than what Social Security spousal benefits allow for.
Contact [email protected] for any questions or corrections.
Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
