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The Spousal Benefit

Fun With Dick and Jane
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One of the most confusing concepts in the Social Security retirement system is the Spousal Benefit.  This option allows one spouse to file for benefits and the other spouse to receive a benefit based upon the first spouse’s retirement benefit.  The greatest amount that the Spousal Benefit could be is 50% of the PIA (Primary Insurance Amount, generally equal to the retirement benefit at Full Retirement Age, or FRA) of the spouse who has filed.

Let’s work through a few examples to explain this. Let’s say we have a couple named Dick and Jane. Dick is 66 years old, and Jane is 62. Dick is eligible for a benefit at his current age of $2,400 per month, and Jane would be eligible for a benefit of $1,000 when she reaches FRA.

Example 1

If Jane files for her own benefit today, it will be reduced by 25% due to early filing, for a total benefit of $750. If she also files for the Spousal Benefit today (Dick will have to have filed to enable this), then her Spousal benefit would be equal to 50% of Dick’s PIA minus 35% ($2,400 times 32.5% equals $780) minus her own PIA of $1,000. In other words, filing for the Spousal Benefit now would mean that Jane will not receive a Spousal Benefit since the Spousal Benefit at her current age is less than her PIA ($780 vs. $1,000).

Example 2

Jane could delay until she reaches FRA before filing for Spousal Benefits, which would then give her a Spousal Benefit of 50% of Dick’s PIA ($2,400 times 50% equals $1,200) minus her PIA of $1,000, for a Spousal Benefit differential of $200 ($1,200 minus $1,000). Her total benefit would be the reduced amount of $750 plus the $200 differential.

Example 3

If Jane delays receiving her own retirement benefit until FRA, she would receive the full $1,000. At this point she could also file for Spousal Benefits, giving her an additional $200 (as calculated above) for a total benefit of $1,200, exactly half of Dick’s PIA.

Keep this factor in mind: Jane can file for her own benefit early and delay the Spousal Benefit until later (as long as she’s not currently eligible for the Spousal Benefit in the month that she files for her own benefit, due to deemed filing); she cannot file for Spousal Benefits early (before FRA) and delay her own benefit.

Example 4

On the other hand, she could wait until she reaches FRA and then file solely for the Spousal Benefit, delaying her own benefit until age 70 if she wishes.

This is because once Jane reaches FRA she is no longer subject to the deemed filing rule.  This means that her Spousal Benefit would be calculated based upon 50% of Dick’s PIA – but Jane’s PIA is not subtracted from it since she has not filed yet.

Example 5

Mixing this up a bit, if Jane and Dick were the same age, Jane could file for her own benefit at any age, and then at FRA Dick could file for a Spousal Benefit based upon 50% of Jane’s PIA – and just like in Example 4, his Spousal Benefit would not be reduced by his benefit since he has not filed yet.

Conclusion

The following rules apply:

  • In order to be eligible for Spousal Benefits, your spouse must have filed for his or her own benefit.  He or she could suspend benefits if he or she is at least FRA.
  • If applying for your own benefit prior to FRA when you’re also eligible for Spousal Benefits (that is, your spouse has applied for his or her own benefit already), deemed filing requires that you have applied for both the Spousal Benefit and your own benefit at the same time.
  • The Spousal Benefit is always a differential between your own PIA and your spouse’s PIA with a factor applied (50% at the greatest, 35% at the least, depending on your age).
  • If you have already applied for your own benefits, the Spousal Benefit differential is added to your own benefit to give you your total benefit.  If your own benefit is reduced due to having filed early, your total benefit will always be something less than 50% of your spouse’s PIA, even if you wait until your own FRA to file for Spousal Benefits.
  • If you have not applied for your own benefits and you’re at least FRA, deemed filing doesn’t apply and you can file solely for your Spousal Benefit, equal to 50% of your spouse’s PIA.  This allows you to earn delayed retirement credits on your own record up to age 70.
  • Spousal Benefits are only available to one spouse at a time.
  • Spousal Benefits are not available if you have filed and suspended your own benefit.

Hopefully this review will help you as you work through the options of the Spousal Benefits for you and your spouse.  If not, you can always leave a question in the comments – and I’ll do my best to help you understand the way it works.

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9 Comments

  1. [...] a previous article we reviewed the very confusing  Social Security Spousal Benefit.  That article raised a lot of questions from readers about another confusing provision of the [...]

  2. T. A. JohnstonNo Gravatar says:

    My wife and I will both be 66 in August. The plan is for her to file on her own record and I will file for spousal benefit. At 70 I will file for my own benefit. The question is can she then file for spousal benefit?

    1. jblankenshipNo Gravatar says:

      TA, if you’re asking can your wife file for the Spousal Benefit once you file at age 70, the answer is yes. The only issue is that the two of you can’t be receiving Spousal Benefits at the same time, so in your scenario this will work out just fine.

      jb

  3. [...] File and suspend is generally an option that is used by a married couple – providing a method by which one of the two can receive Spousal Benefits while the other delays receiving benefits until later, earning DRCs.  (For more on this, see this article on Spousal Benefits.) [...]

  4. [...] up my article which provided several brief examples of the Social Security Spousal Benefit, I thought I’d provide some further explanation and background for the provision. It appears [...]

  5. Marvin MulhaneyNo Gravatar says:

    Jim, Thanks for the article. Here is my situation. My wife is 61 and is at 39 credits, one short to get SS. She no longer works outside the home and has not for years. I believe she needs to earn only about $1130 to get to 40 credits. If she gets to 40 credits before age 62 (which I think is do-able), from what I can estimate from the SS site, her SS at age 62 will be about $227, $310 if she waits till FRA at 66, and $422 if she waits till 70. I am 62 and have not yet taken SS yet. I am still working. We really do not need the income right now. We are both in good health. If I take SS at FRA, I get $2,532 and if I wait till 70, $3,384. I know it’s a personal decision, but what do you suggest? I am thinking she should try to get to the 40 credits and then take the $227 next year –agree?. Where I am confused is what should happen at her FRA of 66? Should I file and suspend at her age 66 so she can get a spousal benefit also? (if so how much does she get?). OR, if that is not allowed, should I file for a spousal benefit when she is at FRA which would be half of her PIA at that time ( a small amount I know). Please guide me.

    1. jblankenshipNo Gravatar says:

      Marvin –
      Since she’s that close (only one quarter away) it makes sense if your wife could work for that quarter and get the full credit. Then, as you suggest, at age 62 she could begin receiving the reduced benefit (which is only reduced by $83 from your estimate). At your full retirement age you could file and suspend, and your wife could then file for the Spousal Benefit, which would essentially be 50% of your PIA (the benefit if you took it at Full Retirement Age) minus $83 (plus cost-of-living adjustments).

      Hope this helps –

      jb

      1. Marvin MulhaneyNo Gravatar says:

        Thanks, Jim, for the quick reply. Still confused about one point, however. In your example 2 above, which sounds like my situation, you mention she would file for a spousal benefit when “she” reach FRA; but in your reply to my question, you said she could file for spousal benefit at “my” FRA. Which is it?

        1. jblankenshipNo Gravatar says:

          My apology, Marvin. I mistakenly thought that you said your wife was the same age as you are. It is correct that she would be eligible for the 50% factor Spousal Benefit when she reaches FRA, assuming that you have filed for your benefit by that time.

          jb