Actress Alice Terry (Photo credit: Wikipedia)
Some time ago I wrote an article on the Social Security Spousal Benefit Before FRA, and an astute reader (thanks, SD!) pointed out the obvious to me: I hadn’t written the complementary piece on calculating the spousal benefit at or after FRA. So let’s get right to it!
When you wait until Full Retirement Age to file for spousal benefits, there is no reduction of that portion of your benefits. In other words, the spousal benefit will be based on 50% of your spouse’s PIA minus your own PIA, and then this amount will be added to whatever retirement benefit that you’re receiving on your own record. This additional benefit can’t increase your total benefit to a point greater than 50% of your spouse’s PIA.
Here are some examples:
Started own benefits early
Alice and Terry are both age 66. Alice started her own benefit early, at age 62. Her PIA is $800, and Terry’s PIA is $2,000. Since she filed early, Alice’s monthly benefit is reduced to $600, 75%, of her PIA. Now at age 66 (FRA for both of them) Terry files and suspends, allowing Alice to file for spousal benefits. The calculation is as follows:
50% of Terry’s PIA ($1,000) minus Alice’s PIA ($800) equals $200
Therefore, when Alice files for spousal benefits, she will receive an additional $200 on her monthly check, for a total of $800.
Started own benefits at FRA
If Alice had delayed filing for her own benefit until she was at FRA, her own benefit would be $800. If Terry has filed for his own benefit or filed and suspended, Alice can now file for the spousal benefit. The calculation is as follows:
50% of Terry’s PIA ($1,000) minus Alice’s PIA ($800) equals $200
This $200 is then added to Alice’s own retirement benefit, so her total benefit amount is now $1,000. This is equal to 50% of Terry’s benefit, so there is no further reduction.
Started own benefits after FRA
If Alice was two years older than Terry, for example, Alice could have delayed starting her own benefit to an age later than FRA, and therefore her benefit would be increased by Delayed Retirement Credits of 8% per year. If she filed for her own benefit at age 68, her own benefit would now be $928, an increase of 16%. When Terry reaches FRA and files for his own benefit (or files and suspends), she is now eligible for the spousal benefit. The calculation is as follows:
50% of Terry’s PIA ($1,000) minus Alice’s PIA ($800) equals $200
Since adding the spousal offset to Alice’s own benefit would result in a total monthly benefit greater than 50% of Terry’s PIA, the overall increase for the spousal benefit would be reduced to $72, so that Alice’s total monthly benefit would not be greater than half of Terry’s PIA, the maximum benefit due to spousal increase.
