How Can My Spouse Squeeze the Most From Her Social Security Benefits?

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This week’s question comes from Jay:

“I have reached full retirement age (FRA) and am now drawing Social Security. My spouse is 62. Her FRA benefit is less than half of mine. Can she start receiving 50% of what I receive from Social Security? If she claims a spousal benefit and continues to work, can she receive more than 50% of my benefit if her full retirement benefit eventually exceeds 50% of my benefit?

The challenges of getting a big benefit

Jay: Your question raises a number of issues related to the interaction among retirement benefits, spousal benefits and the earnings test. (The earnings test can reduce benefits if you start taking benefits before full retirement age and continue working.)

First, since your wife was born after 1953, she is covered by the deeming rule, regardless of her claiming age. This means that if she claims one benefit — say, a spousal benefit — the Social Security Administration deems that she is also claiming her own retirement benefit at the same time. So, she has no opportunity to switch from one benefit to another.

Second, the spousal benefit is always treated by the SSA as a supplementary benefit. If your wife is eligible for her own retirement benefit, then she is paid that benefit first. If her FRA retirement amount falls below half of your FRA benefit amount, she is eligible for a supplemental spousal benefit. Claiming at her FRA, the supplemental amount would bring her up to one-half of your FRA amount.

Third, early claiming complicates matters, since both benefits are reduced, but at different rates. To illustrate, suppose your FRA amount is $2,500 and your wife’s FRA retirement amount is $1,000. This implies that her FRA spousal supplement would be $250, to bring her total benefit up to $1,250, or one-half of yours.

If she claims at 62 (and assuming that she was born in 1957, as her age now indicates), her own monthly benefit is reduced by 27.5%, or to $725. Her spousal supplement is reduced by 32.5%, or to $169. Overall, her monthly benefit falls from $1,250 to $894 if she claims at 62.

Finally, the earnings test could further reduce the benefits that your wife receives if her earnings exceed $17,640 per year. Her benefits will be reduced by $1 for every $2 she earns over this limit. The good news is that any money she loses because of the earnings test is potentially recoverable after she reaches FRA, when there is an adjustment for such lost benefits.

You suggest that if she continues working, her own benefit may eventually be greater than 50% of yours. One way that can help you forecast this is to use one of the benefit estimators available on the SSA website. Generally, these calculators require previous earnings information available on a person’s Social Security statement. She can access this by going to the My Social Security webpage.

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About me

I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years. In 2009, I co-founded SocialSecurityChoices.com, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.

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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.