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Note: with the passage of the Bipartisan Budget Act of 2015, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. Specifically, Example 4 and Example 5 below are not available if the person filing for spousal benefits was born in 1954 or later.
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 (his FRA), 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 (66 years, 6 months).
Example 1
If Jane files for her own benefit today, it will be reduced by 27.5% due to early filing, leaving her a total benefit of $725. If she also files for the Spousal Benefit today (Dick will have to file for his retirement benefit to enable this), then her Spousal benefit would be equal to 50% of Dick’s PIA minus a factor for filing early ($2,400 times 50% times 67.5% equals $810) minus her own reduced benefit of $725. In other words, filing for the Spousal Benefit now would increase Jane’s overall benefit by $85 per month.
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 $725 plus the $200 differential, totaling $925.
Due to deemed filing, this delay is only possible for Jane if Dick delays filing for his retirement benefit until Jane is at FRA. Dick would then be 70 years, 6 months. If Dick files for his retirement benefit at any earlier age, Jane will be deemed to have filed for the spousal benefit as soon as she becomes eligible for the benefit (when Dick has filed).
If, for example, Dick files for his benefit at his age 70, Jane will be 66 at that point, 6 months before her FRA. The deemed spousal benefit for Jane would be 47.92% of Dick’s PIA, or $1,150. Subtracting Jane’s PIA from this amount yields $150, which is then added to her earlier-reduced benefit of $725 for a total monthly benefit amount of $875.
Example 3
If Jane delays receiving her own retirement benefit until FRA, she would receive the full $1,000. At this point she would 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 (only if Jane was born before 1954)
On the other hand, Jane could wait until she reaches FRA and then file solely for the Spousal Benefit, delaying her own benefit until age 70 if she wishes (if she were born before 1954).
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.
If Jane was born on or after January 2, 1954, this option is not available.
Example 5 (only if Dick was born before 1954)
Mixing this up a bit, Jane could file for her own benefit at any age, and then Dick could file for a Spousal Benefit based upon 50% of Jane’s PIA since he’s 66, his FRA. Just like in Example 4, his Spousal Benefit would not be reduced by his benefit since he has not filed yet. Later Dick would file for his own benefit (as late as his age 70), which then would deem Jane to have filed for the spousal benefit based on Dick’s record.
As before, if Dick was born on or after January 2, 1954, this option is not available.
Conclusion
The following rules apply:
- In order to be eligible for Spousal Benefits, your spouse must have filed for his or her own benefit.
- 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 you to apply 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 filing 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.
- Spousal Benefits are only available to one spouse at a time.
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.
Sterling Raskie, MSFS, CFP®, ChFC®
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Thanks Jim for all the great information here and in your book. Say two spouses born before 1954 have done the higher-earner-claims-spousal-benefit-till-70/lower-earner-claims-at full-retirement. Are there any tips or cautions on how to work with SSA on changeover once the higher earner reaches 70? That is, will SSA automatically switch both spouses over, or do you have to apply at 70 to cancel spousal benefits etc? Not sure how it plays out at that stage. I’m anxious about knowing that the SSA is giving the full benefit at exact age of 70. Thanks again.
I wouldn’t leave it to chance. You should either call SSA or go through the application for the spousal benefit to make certain that it’s switching over as you expect.
My FRA is 67 with PIA of $2952 while my spouse’s FRA at 66 1/2 with PIA of $984. He is 5 years older than me and i am planning to claim mine SSI at 70 then my spouse can claim his spousal benefit.
But I still have not figured out for maximizing our benefits, should he claim his own earlier at 62 or his FRA?
Thanks
Just a suggestion, without running the numbers: it’s likely best for your spouse to take his benefit at the earliest age (as long as he’s not working and earning more than the annual test allows). This is because he’ll then be receiving that benefit for many more years, even though it’s reduced. And the dollar amount of the reduction should be relatively minimal – my quick calculations show that he would be receiving approximately $713 if he files at age 62.
Hi Jim. Great article, which, along with your book, sheds much light on the subject. My question is this: are spousal and survivor benefits mutually exclusive? In my case, we are thinking that my wife (lower earner), who is 6 months younger than me, files for her benefit about 12 months before her FRA while I wait until age 70 so that we can generate some cash flow in the interim. I understand that she could switch to a reduced spousal benefit when I file at 70, but I want to make sure her survivor benefits are not penalilzed. My understanding is that as long as she doesn’t file for survivor benefits before her FRA, she will get my full benefit when I die. Thanking you in advance. Joe
Survivor benefits are not influenced by filing early for your own or spousal benefits. In your case, if you die before your wife, she would be eligible for a survivor benefit equal to your current retirement benefit.
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?
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
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.
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
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?
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