Welcome to our “Social Security Q&A” series. You ask a question about Social Security, and a guest expert answers it.
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Today’s question comes from Don:
“My wife will draw up to one-half my Social Security benefit, as she has not worked. I know that she gets the maximum benefit if I reached my full retirement age (FRA) if she is at her FRA. If I were to draw earlier than my FRA but my wife waits until her FRA, would she get a higher benefit, or will it always be based on what I get no matter when she draws?”
How do spousal benefits work?
Don, you have asked a great question. Over the years I have encountered many clients who are confused about spousal benefits. Let’s see if we can clear up some of that confusion.
Your wife’s case is the simplest one because she has no benefits on her own account. Once you claim your own retirement benefits, your wife becomes eligible to claim spousal benefits, provided she is at least 62 years old.
Your claiming age has no effect on your wife’s claiming options. To illustrate, let’s assume that your wife’s full retirement age (FRA) is 67. Also, assume that your FRA benefit amount at 67 is $2,000, so your wife’s FRA spousal benefit amount is $1,000. Regardless of when you claim — anywhere between 62 and 70 — your wife’s maximum benefit at her FRA remains at $1,000.
If she claims early, she faces an early claiming penalty, which reaches 35% if she claims at 62. In contrast, she gains nothing by delaying claiming beyond her FRA. Unlike retirement benefits, spousal benefits do not increase as a result of delayed claiming beyond one’s FRA.
I used my firm’s software to investigate whether this type of case offered any suggestions for optimal claiming strategies. For couples with an age difference of three years or less, the optimal time for the husband to claim is when the wife reaches her FRA. Her benefit is maximized at her FRA, so the advantage of claiming after her FRA is greatly diminished as compared to claiming at her FRA.
One can find exceptions to this rule of thumb, but in general, it provides good advice.
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I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years.
Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.