Dear Rusty: I am 65 and still working and plan to work for some time to come. My birthdate is February 1955. My wife is 64 and not working. Her birthdate is January 1956. Half of my benefit is more than half of hers. I am confused on the spousal benefit rules. If she were to take her Social Security early before she reaches her full retirement age, what are the rules that affect her? Signed: Confused Husband
Dear Confused: First I must clarify that spousal benefits do not work as you have suggested, that “half of my benefit is more than half of hers.” Spousal benefits are always based upon the amount the individuals are due at their full retirement age, regardless of the age at which they claim. If half of your benefit at your full retirement age (FRA) is more than your wife’s full benefit at her full retirement age, then the difference between those two numbers is a “spousal boost” which is added to your wife’s own payment amount when her spouse benefit starts. If she has reached her FRA when you claim and her spouse benefit starts, your wife will get the entire spousal boost; if she has not, the spousal boost will be reduced. Your wife cannot collect a spousal benefit until you start collecting your Social Security, so if she claims benefits before you claim she will initially get only what she is entitled to on her own work record. Then when you claim, the “spousal boost” will be added to her benefit. If you claim at your FRA, your wife will not yet have reached her full retirement age, so her spousal boost amount will be reduced and added to her own reduced benefit amount, making her total benefit as your spouse less than 50% of your FRA benefit amount.
Your full retirement age is 66 years and 2 months, and you won’t be entitled to full benefits until you reach that age. For your awareness, you can wait beyond your FRA and earn delayed retirement credits, up to age 70 when your benefit would be about 31% more than it would be at your FRA, but your wife cannot get her spousal boost until you claim. And also for your awareness, if you claim benefits before you reach your FRA and continue to work, you’ll be subject to Social Security’s earnings limit ($18,240 for 2020) which, if exceeded, will cause SS to take back some of your benefits. The earnings limit goes up by about 2.5 times in the year you reach your FRA and goes away when you reach your full retirement age.
Your wife’s full retirement age is 66 years and 4 months and any benefits she claims on her own record prior to reaching that age will be reduced. At 64 she could claim her own benefit from her own work record (assuming she has at least 40 SS credits), but that benefit would be reduced to about 85% of what she would get at her FRA. And claiming at age 64 would also affect the amount of her spousal benefit when that starts. The only way your wife can get 100% of the amount she is due as your spouse is to wait until her FRA to claim any benefit. If she claims her own benefit at age 64 or any time before her FRA, not only will her own benefit be reduced, but her eventual benefit as your spouse will be less than 50% of your FRA benefit amount, even if you wait to claim until your wife reaches her FRA. That’s because her spousal boost, when it occurs, will be added to the reduced SS retirement amount she is getting because she claimed before her full retirement age.
You are certainly not alone to be confused about spousal benefits as this is one of the most confusing areas of Social Security’s rules. But I hope the above provides what you and your wife need to make an informed claiming decision.
Russell Gloor is an Association of Mature American Citizens certified social security advisor. To submit a question, visit amacfoundation.org/programs/social-security-advisory or email email@example.com.