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This week’s question was submitted by Laura:
I am the major earner in the family. My husband took care of the children and started back to work after they were grown. He has just hit his full retirement age of 66. I am 62 and plan on working another eight years to maximize my Social Security benefits. I have two questions. First, if he were to file now, would any of that money be withheld based on the family income? Second, if he files for benefits under his earnings now, can he switch to filing under my earnings when I retire?
When do you qualify for spousal benefits?
Laura, those are great questions.
First, your husband’s benefit amount would be reduced only by his earnings, not by family income. So, what you are earning does not matter. Moreover, your husband has reached his full retirement age (FRA), so the earnings penalty no longer applies to him. He can earn as much as possible at this point and have no effect on his benefits.
Your second question involves a more complicated answer. Let me note first that no switching of benefits is involved. If your husband is eligible for a supplemental spousal benefit, that benefit would simply be added to his retirement benefit.
Whether he qualifies for a supplemental spousal benefit depends on the relationship between your respective FRA benefit amounts. If his FRA amount is more than one-half your FRA amount, he does not qualify for any supplement. If his FRA amount is less than one-half your FRA amount, he does qualify.
Since I don’t know the details of your situation, let’s look at an example. Suppose your monthly FRA amount is $2,600 and his is $1,000. Half of your FRA amount is $1,300, so he could receive, at most, a $300 spousal supplement based on your earnings record. Since he has already reached his FRA, his benefit amount is unaffected by any early claiming penalty.
Had he claimed benefits before his FRA, the early claiming penalty would have reduced the maximum combined amount he could receive to something less than $1,300. As you suggested in your question, he cannot apply for spousal benefits until you apply for your own benefits.
Is your proposed plan one that maximizes your family’s Social Security benefits? I can’t say for sure since I don’t have all the details of your situation. I ran the above example through my firm’s software, and the result suggested you claim earlier than 70 for a normal life expectancy.
Of course, the above example may misrepresent your case. It does suggest that you might benefit from inexpensive professional help before finalizing your joint claiming decisions.
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The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.
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.
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