Although millions of older Americans collect a retirement benefit from Social Security today, it’s not a given that you’ll end up being eligible for those monthly checks. If you have a pretty bare-boned work history, or if you don’t work and pay into the system at all, you may not get any Social Security — that is, unless you’re married to or divorced from someone who’s eligible.

One nice feature of Social Security is that it pays spousal benefits to current and former spouses of beneficiaries. But there are rules you’ll need to learn if you’re planning to collect spousal benefits. And you’ll also need to be very careful if you’re aiming to sign up for spousal benefits early.

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You could end up with very little money

Social Security spousal benefits max out at 50% of what your spouse (or ex-spouse) is entitled to at their full retirement age. Put simply, if your spouse is entitled to $1,600 a month at full retirement age, the maximum spousal benefit you can collect is $800 a month.

But just as people who are eligible for Social Security based on their own earnings can sign up for benefits as early as age 62, so too can you claim a spousal benefit at that age. However, you should know that you’ll face a permanent reduction for taking spousal benefits before reaching your own full retirement age. And you may end up pretty unhappy with the amount of money Social Security pays you each month.

The formula for reducing spousal benefits for an early filing is somewhat complicated. But basically, your spousal benefit will be reduced by about 7/10 of 1% for each month you file before full retirement age, up to 36 months. If you exceed the 36 month-point in the context of filing early, Social Security will reduce your spousal benefit by about 5/12 of 1% per month.

So here’s how that might shake out. Let’s go back to our example and assume that your spousal benefit maxes out at $800. If you decide to claim your spousal benefits three years ahead of your full retirement age, you’re looking at roughly a 25% reduction. So that would whittle your $800 spousal benefit down to $600.

If you file four years early, you’re looking at about a 30% reduction. So that would leave you with about $560 a month.

It’s important to know the rules

Social Security spousal benefits could end up playing an important role in your retirement finances. So you don’t want to make the mistake of signing up too soon.

That said, delaying your spousal benefit claim past full retirement age is also a mistake. And the reason is that you can’t grow a spousal benefit like you can grow your own benefit.

When you’re claiming Social Security based on your own earnings record, your monthly benefit increases 8% for each year you delay your claim past full retirement age. That provision does not apply to spousal benefits. In the above example, your spousal benefit maxes out at $800 whether you sign up at full retirement age or wait beyond that point.

However, you should also know that if your spouse passes away, your spousal benefit will be converted to a survivor benefit. And at that point, Social Security will pay you 100% of whatever amount your spouse collected while they were alive.

If your head is spinning by now, that’s understandable. So take the time to read up on Social Security. That way, you’ll hopefully get a better grasp of how the program works — both in general and in the context of spousal benefits.

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