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Today’s question comes from Tony:
“My wife claimed her Social Security benefits at age 62 in 2008, and got approximately $566 a month. I started claiming mine at 66 in 2014, and got approximately $1,700 a month. We recently read an article about claiming spousal benefits that suggested we could get Social Security to bump her benefit up to half of what I get. We have missed out on this because we didn’t know about it, and we never have received anything from Social Security other than the yearly report informing us of any increases due to cost-of-living adjustments.
We plan to make an appointment with a Social Security representative to claim the benefit, but do you know if it’s retroactive? It’s a shame that we missed out on this benefit for so many years for lack of knowledge on our part and lack of information from Social Security.”
Lost benefits are not found again
Tony, it is indeed the case that Social Security agents will sometimes misinform, or fail to inform, people about the claiming options available to them. I routinely hear from clients that our advice allowed them to avoid this problem of misinformation about Social Security claiming options.
I do wonder how many billions of dollars in benefits Social Security beneficiaries lose as a result of agents who misinform, or simply don’t inform people about their claiming options.
Many people are unfamiliar with the spousal benefit. A key reason for this lack of familiarity is the absence of any explicit mention of the spousal benefit on an individual’s Social Security benefit statement (which is available by opening an account through the Social Security Administration website).
For many people, their research into Social Security claiming options begins and ends with their statement. With no mention of spousal benefits, it is easy to overlook that benefit.
It appears that your wife has missed out on spousal benefits for about five years. Unfortunately, she is unlikely to get very much of those missed benefits. Social Security will pay out only six months of retroactive benefits in cases like these.
Not to rub salt in the wounds, but let’s see how much your wife has lost over the last several years. The spousal supplement is determined by first comparing retirement benefits at each spouse’s full retirement age (FRA). Tony, you indicate that your FRA benefit is $1,700. Your wife’s FRA benefit would be about $750 (based on her age 62 benefit of $566).
The FRA spousal supplement is then calculated as one-half Tony’s FRA benefit minus his wife’s FRA benefit. That difference is $100 a month ($850-$750).
So, Tony, you and your wife missed out on about $1,200 a year for about five years, for a total of about $6,000. Through a retroactive payment, you and your wife should get about $600 out of the $6,000.
This gets me around to my usual advice: Get some inexpensive professional advice before trying to tackle the problem of deciding on the best claiming option.
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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.