Social Security Advice – Understanding Social Security Spousal Benefits
By Diane M. Wilson CFP® Several articles have been published in reference to claiming Social Security spousal benefits. As an individual with advanced knowledge of the Social Security rules, I find that some articles create more confusion, rather than greater understanding. A clearer understanding of spousal benefits will help.
One article stated that a spouse can take spousal benefits at 62, then switch to their own benefits at full retirement age. I will explain Social Security spousal benefits, within this context, in simplistic and meaningful terms. Individuals may have a clearer understanding of the rules related to spousal benefits when they are also entitled to Social Security benefits on their own work record.
Social Security Spousal Benefits
If a claiming spouse is entitled to Social Security benefits from their own work record, a rule called ‘deemed filing’ will be applied. Deemed filing states that if an individual is under full retirement age, they must file for their own Social Security benefits. Therefore, deemed filing will require the spouse to file for their own benefits. If the claiming spouse is entitled to additional benefits from the other spouse’s record, and if the other spouse’s record is open, then those spousal benefits will be added to the benefits received from their own record.
An example will clarify how the deemed filing rule works and how the spousal benefit is calculated
A husband is taking his Social Security benefits. He filed at full retirement age and receiving $2,200 monthly.
His wife wants to file for benefits at age 62. Her insurance amount at full retirement age is $900 per month. If she files at age 62, her benefits will be calculated as follows:
(One half of the husbands benefits at full retirement age minus her own full retirement age benefit) plus her own Social Security benefit.
Spousal benefit: ($2,200 * .50 = $1,100) ($1,100 – $900 = $200)
Benefit received: ($900 x .75 = $675) + ($200 x .70 = $140) ($675 + $140 = $815)
The wife will receive her $900, which will be reduced 25% for taking it at 62, netting her $675.
She will receive $200.00 from her spouse, which will be reduced 30% for taking it at 62, netting her $140.
The total amount she will receive is $815. $675 from her own Social Security work record and $140 in spousal benefits.
She will not switch to her own record at full retirement age. She is already taking her own record.
The spousal benefits also works if the husband is the one who wants to take spousal benefits from his wife’s record. Social Security is an equal opportunity program. Only one spouse can take spousal benefits at a time.
In addition, other factors may come into play that may impact the benefits. The other factors include, but are not limited to:
- Is the applicant working for wages? The earnings, if still working, must be under the earnings limitation or a benefit reduction will apply.
- What is the applicant’s day of birth? If the day of birth is not the 1st or 2nd day of the month, they must be 62 and 1 month to be eligible to file for benefits.
- If the applicant is not entitled to Social Security from their own work record, is it because of state or government employment, and are they entitled to a pension from this employment.
- The deemed filing rule applies to all applicants, at any age, if they were not at least age 62 by January 1, 2016.
Many factors must be considered when evaluating each Social Security rule. Interpretation of the rules can be challenging. A clear understanding of the rules is a must to make the best claiming decision to receive all the benefits one believes they will receive. Professional assistance should not be overlooked. Always evaluate the credentials of professionals before choosing the one to work with. The expenditure for professional Social Security advice may be the best money you ever spent.