Strategies For Maximizing Spousal Benefits
Every married couple has to figure out the best way to maximize their benefits depending on their own circumstances.
The three strategies below will help you make the most of your Social Security spousal benefits, depending on your circumstances. However, keep in mind that, regardless of your circumstances, the most a spouse can get is 50% of the amount that the higher-earning partner is entitled to at full retirement age.
How Do I Estimate My Monthly Retirement Benefits
You can estimate your monthly retirement benefits by calculating your PIA, the monthly benefit youre eligible to receive once you reach your FRA. To determine your PIA, the Social Security Administration uses your best 35 years of employment to arrive at your Average Indexed Monthly Earnings . If you havent worked for 35 years, some of the included earnings may be zero.
If you continue working after reaching your FRA, the SSA will automatically recalculate your benefits each year you continue to work. If your current income is greater than any of your previously calculated best 35 years, your benefits will be adjusted upward. The increase generally will be made in October of the following year but will be retroactive to January 1.
Social Security retirement benefits are automatically modified each year for cost-of-living adjustments , which are either positive or zero never negative. COLAs are based on the Consumer Price Index and have averaged between 1% and 2% over the past 10 years.
For more information, the SSA offers a helpful Social Security retirement calculator.
Can I Collect Social Security Spousal Benefits
Keep in mind
- Your spousal benefit is not affected by the age at which your husband or wife claimed Social Security benefits. It will always be based on your mates primary insurance amount.
- With survivor benefits, if your late spouse boosted his or her Social Security payment by waiting past FRA to file, your survivor benefit would also increase.
- Your spousal or survivor benefits may be reduced if you are under full retirement age and continue to work.
- Social Security is phasing in the FRA increase differently for different types of benefits. For retirement and spousal benefits, full retirement age will reach 67 for people born in 1960 and after. For survivor benefits, its 1962 and after.
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How Spousal Benefits Are Calculated
Spousal benefits are based on how much the other spouse would receive if that person began collecting benefits at the full or “normal” retirement age.
The Social Security Administration has an online calculator that can show you what percentage of your spouse’s benefits you will be eligible for depending on your own age when you start receiving benefits.
The short answer to the calculation is this: You’re eligible for half of your spouse’s benefit amount as long as you wait until your full retirement age to apply. The earlier you file, the less you’ll get.
Whats A Restricted Application
Some people are allowed to take a spousal benefit while delaying their own benefits until age 70. For example, if you are eligible, you could take half of your spouses benefit, let your own grow until you are 70, and then switch to your larger benefit.
You may only file a restricted application if you were born before Jan. 2, 1954**. You also must have reached your full retirement age, and your spouse must already be collecting his or her own benefit. For more, read Restricted Application Social Security Strategy Is on Its Way Out.
As you can see, I needed to add footnotes to even the simplest questions, and there are many more exceptions and permutations that can affect your benefits. Even so, I hope Ive answered a few of your questions, and more so, inspired you to plan ahead with your spouse so you can both get the most out of your Social Security in retirement.
*You may be able to take benefits earlier if you are caring for dependent children.
**There are some exceptions for people who are disabled or caring for dependent children.
Claiming Early Or Late
Your spousal benefit is based upon your partner’s “normal” benefit amount. But the amount you receive will depend upon when you begin to claim it.
You can claim spousal benefits as early as age 62, but you won’t receive as much as if you wait until your own full retirement age. For example, if your full retirement age is 67 and you choose to claim spousal benefits at 62, you’d receive a benefit that’s equal to 32.5% of your spouse’s full benefit amount.
The amount increases with each year you delay. At your full retirement age you’d be eligible for the maximum, which is 50% of your spouse’s full benefit.
Notably, spousal benefits are not reduced if the spouse is caring for a child who qualifies under the age or disability rules. Spousal benefits can never exceed 50% of the other spouses full benefit. So, there is no incentive to file for spousal benefits later than your own full retirement age.
An ex-spouse may be eligible for spousal benefits even if the former spouse hasn’t retired yet.
Can I Still Collect Spouse And Survivor Benefits After Divorce
You may be eligible for spousal benefits based on your ex-spouses earnings history if you were married for at least 10 years, have been divorced for at least two years, and both you and your ex-spouse have reached age 62.
These benefits include the same 50% that applies to married couples. But as with survivor benefits, if you earned a government pension while not paying into Social Security, your benefit could be reduced as a result.
Should your ex-spouse pass away, you may also be eligible for survivor benefits. You could receive the same benefits as a widow or widower, without affecting the benefits of other survivors. Similarly, if your ex-spouse remarries, you can still receive benefits without impacting the benefits of his or her current spouse.
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Length Of Marriage Is Important
You must be married to your current spouse for at least one year to be eligible for Social Security spousal benefits. There are a couple of exceptions to this rule, though. If you marry someone who is the biological parent of your child, the one-year waiting period can be waived. Also, if you were entitled to Social Security benefits based on someone elses work record in the month before you married, the SSA will waive the one-year waiting period.
Situations like this include existing spousal benefits, a survivors benefit, or parents benefits. For example, if you were already eligible for spousal benefits based on the earnings of a former spouse, then remarried, youd immediately be eligible for spousal benefits based on your new spouses earnings, with no one-year waiting period.
How Much Do Widowed Spouses Receive
Social Security survivors benefits are especially important to women , because wives tend to earn less than their husbands, and they also typically outlive their husbands. When a retired worker dies, the surviving spouse receives a benefit equal to the deceased workers full retirement benefit.
Depending on the widows or widowers circumstances, however, this benefit may substantially reduce her monthly household income because only one Social Security benefit is now arriving , not the two benefits that the couple received before the spouses death. Women who had worked and earned their own Social Security benefits, in particular, may find themselves struggling to meet the rising fixed expenses that come with aging.
For more information on Social Security and survivor benefits, please visit the Social Security Administration at ssa.gov/benefits/survivors/.
Divorced Know This Significant Exception To The Rule
When planning your Social Security filing strategy, its important to note that you cannot file for a spousal benefit until the higher earning spouse files for their benefit.
But this does not apply if your are filing for a spousal benefit from an ex-spouse.
If your ex-spouse has not applied for retirement benefits you can receive benefits on his or her record if you have been divorced for at least two years and your ex-spouse is at least 62.
Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Heres A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits
When youre years away from retirement, Social Security seems straightforward: Youll leave your job, file for benefits and receive a monthly check for the rest of your life boom! But in reality, getting the most out of Social Security is anything but simple. As you near retirement, the decisions you make could have a significant impact on the amount of money you receive, and some of these choices are irrevocable. Youll need to move carefully to maximize this income stream.
Here are 12 essential details you need to know.
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When Should You Claim Spousal Benefits
While this is a personal decision, you cant claim spousal benefits before age 62. If you opt for sometime after reaching age 62 and before your full retirement age, youre likely to see your benefits reduced.
And if you wait until after your full retirement age, benefits wont increase. The wage earner may benefit from delaying benefits until age 70, but the spouse applying for benefits wont.
For those looking to max out their spousal benefit, one course of action is obvious.
The best strategy to claim Social Security retirement benefits as a spouse is to wait until you reach normal retirement age, 65 to 67, depending on birth year, says Lindsay Malzone, a Medicare expert at website MedicareFAQ. Unless you currently care for a qualifying child, you will receive a reduced benefit if you have not yet attained normal retirement age.
But there are exceptions to this general rule, especially if you believe your longevity is an issue.
We usually start by considering health: How long did the same-sex parent live and whats the current health situation for both partners, Ward says. Those with long expected life spans and good health are usually best off waiting until the maximum benefit is available. Those with shorter life expectancies or poor health may be better off starting sooner. Those with a terminal illness can file as of six months ago and start receiving payments immediately and collect a check for those missed payments.
Social Security Rules For Nonworker Spouses
Many Americans qualify for Social Security due to their marriage history, even if their work history is nonexistent. If you are ineligible to claim your own benefits, you may be able to receive benefits based on your spouses record once you turn 62, or earlier if youre raising your spouses child who is younger than 16 or disabled.
Nonworking spouses are entitled to 50% of the workings spouses retirement benefit once they reach their own full retirement age . Note: the FRA is the age at which an individual is entitled to the full amount of their own SS benefit, if they qualify. For most people born after 1954, the FRA is between 66 and 67 years old. View the table below to see how a spousal benefit of $500 at FRA could be reduced by as much as 35% if it were claimed at 62.
Although you can claim spousal Social Security as early as 62so long as your working spouse has already claimed his or her own SS benefitclaiming your benefit before you reach your own FRA will lead to a smaller monthly benefit. Your benefit amount will be reduced based on the number of months you claimed early specifically, spousal benefits are reduced 25/36 of 1% per each month claimed early up until 36 months and 5/12 of 1% per each month exceeding 36.
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How Can I Switch From My Social Security Benefit To A Spousal Benefit
You can only switch from your benefit to the spousal benefit if your spouse has not begun receiving retirement benefits. You can claim your benefit based on your work history until your spouse files, and then you can switch to the spousal benefit. However, if you’re not at your full retirement age, you’ll get paid a reduced spousal benefit, which can be as low as 32.5% of your spouse’s primary insurance amount.
To monitor your benefits or change them, you can create an account on the Social Security site. It contains a wealth of information, and it allows you to make some changes online, although others require a phone call.
How Much Are You Entitled To Receive
Both you and your spouse are entitled to Social Security benefits based on your earnings before retirement. Social Security benefits are typically calculated as of your full retirement age, which may vary depending on the year you were born. Filing for Social Security benefits before your full retirement age will result in a reduction of your benefits. You can either take your Social Security benefits or your spousal benefits, which are 50 percent of your spouse’s Social Security benefits as of full retirement age. The Social Security Administration will calculate the amounts for you and pay you the higher amount.
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Other Pensions Might Reduce Your Social Security Benefits
Your benefits will be affected if you have a pension from a job that didnt have Social Security taxes taken out of your paycheck. Common examples include people who worked for a public education system, railroad workers and Federal government employees hired before 1984 who are covered by the Civil Service Retirement System .
Two complicated provisions will affect your claiming strategy: the Windfall Elimination Provision and the Government Pension Offset . The WEP reduces your own benefits by a discounted factor based on how many years you worked in jobs that did not withhold Social Security taxes. The GPO reduces your spousal and survivor benefits by two-thirds of the amount of your noncovered pension.
Strategy For Widowed Spouses
Widows and widowers may receive full benefits at their full retirement age or reduced benefits as early as age 60, as explained in the sections above. Remarrying after age 60 will not affect your eligibility for survivors benefits. However, it may be more convenient for you to forego your widow or widower spousal benefits depending on your circumstances.
If your current spouse is also eligible for Social Security benefits and earns more than your former spouse, you may wish to apply for spousal benefits based on your new spouses record instead.
If you are collecting a survivor benefit, but also qualify for a benefit on your own, you may wish to collect a survivor benefit in the early years of retirement and leave your own Social Security benefits to accrue delayed retirement credits. Then, you can switch to your own retirement benefit as late as age 70.
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Can I Switch From My Social Security Benefit To A Spousal Benefit
You can only make the switch to a spousal benefit if your spouse has not yet claimed their Social Security benefit at the time of your initial filing. According to AARP, if your spouse is already receiving Social Security when you claim your retirement benefits, you are subject to the deemed filing rule, which does not give you the choice to wait or switch.
This provision automatically deems you to apply for your spousal benefit, if youre entitled to them. The SSA will not pay the sum of both you and your spouses benefit rather, you will receive a monthly payment equal to the higher of the two amounts.
Social Security Spousal Benefits Simplified
You may be familiar with the phrase whats yours is mine and whats mine is yours. A motto many married people live by, it is the understanding that two people come together to share one life. They give themselves to each other and vow to work together until death do they part.
Now is a great time to look at Social Security spousal benefits: how they work and when they make the most sense for you and your sweetheart.
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How Are Your Social Security Benefits Calculated
Social Security uses your highest 35 years of earnings, indexed to a national average wage index, to calculate your primary insurance amount If you have fewer than 35 years of earnings, each year with no earnings will be entered as zero. You can increase your Social Security benefit at any time by replacing a zero or low-income year with a higher-income year.
There is a maximum Social Security benefit amount you can receive, though it depends on the age you retire. For someone at full retirement age in 2022, the maximum monthly benefit is $3,345. For someone filing at age 70, the maximum monthly amount is $4,194. And for someone retiring early, at age 62, the maximum monthly benefit is $2,364.
To estimate your benefits, use the Social Securitys online Retirement Estimator.
Social Security Spousal Benefits Faqs
Answers to some of the most commonly asked questions financial advisers get on spousal benefits, including when to take them and how benefits for ex-spouses work.
Social Security is incredibly complicated, and it gets even more complex when there are two of you. How and when each of you takes benefits can affect your income as a couple by hundreds of dollars a month, yet, according to Employee Benefit Research Institute’s 2018 Retirement Confidence Survey, only 23% of workers actually try to maximize their benefits by planning when to claim Social Security.
If youre among the 77% who havent planned ahead, I want to inspire you to take action. Because the rules regarding Social Security are so complex, I strongly suggest you talk to an expert about your particular circumstances, but to get you started, Id like to answer a few questions I often hear:
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