This topic comes from a reader, J., who asks the following question: My wife is 62 and she works a part-time job earning around $23k per year. She is planning to retire in June, and so her total earnings for the year will be approximately $11,500. She would like to begin taking Social Security benefits right after her retirement. The question is this: will her earnings test be based upon her “individual” earnings, or on the higher combined earnings of the two of us (I am still working, earning in excess of the earnings test amount)? Since her earnings of approximately $11,500 are under the $17,640 earnings limit, her earnings would not be reduced – but if the earnings test is based upon both of our earnings combined, her earnings would definitely be reduced. How does this work? My Response Each person’s earnings record is specific to that individual – […]
Social Security
Calculating the Spousal Benefit
The Spousal Benefit is one of the most confusing aspects of the Social Security retirement benefit system. It may be vaguely familiar that the spouse with the lower wage base is eligible for 50% of the higher wage base spouse’s benefit, or something like that… How is the Spousal Benefit actually calculated? Calculating the Spousal Benefit Here’s how the Spousal Benefit is calculated: First of all, the Spousal Benefit is based upon a differential – between 50% of the other spouse’s Primary Insurance Amount (PIA) and his or her own PIA. So what’s the calculation? Let’s look at an example: Let’s say there’s a couple, both the same age with a Full Retirement Age (FRA) of 66, and the wife has a substantially lower wage base (and therefore a lower benefit) than the husband. At age 62, she files for the her own reduced benefit based on her own record, […]
Social Security Spousal Benefit for a Divorcee
Recently we talked about the spousal benefit for Social Security retirement benefits. It is also important to note that similar benefits are available to a divorcee. A divorced spouse is eligible for a Social Security retirement benefit based upon the PIA (Primary Insurance Amount) of his or her ex-spouse under the following conditions: he or she is at least 62 years of age the couple was married for ten years or longer he or she is not currently married he or she is not eligible for a benefit (on his or her own record or another ex-spouse’s record) that would be greater than the benefit based on this particular ex-spouse’s record The divorcée’s former spouse does not have to have applied for benefits, as long as the couple have been divorced for at least two years when he or she applies for the spousal benefit. However, the former spouse must […]
Sterling Raskie, MSFS, CFP®, ChFC®
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.