This week we received an email with questions about Social Security Spousal Benefits. The emailer asked several things I believe relevant to our readers. For conciseness I am condensing the actual questions into bullet points. I am also changing some key figures in order to protect their privacy. The following describes their situation:
Jack and Jill have been married for 30 years. Jack is 61 and Jill is 58. Jill was more the traditional career type and as a high wage earner generated a SS retirement benefit of $2,600/month at her full retirement age (FRA) of 66 and 6 months. Jack stayed home with kids and was on and off self-employed over the years and has a modest benefit of $900/month at his FRA of age 66.
If Jill delays filing a benefit to her age 70 is there any way for Jack to file for a spousal benefit on her record before that? Jack will be 73 when Jill turns 70. Can’t he get something before then?
If Jill files at age 70 her benefit will be $3,120 due to delayed retirement credits. Does Jack at that time receive a spousal benefit of 50% of $3,120 or just 50% of Jill’s PIA of $2,600?
Assuming Jack only receives a $1,300/month benefit when Jill is age 70, the total received by the pair will be $4,420 ($3,120 + $1,300). Will Jack and Jill be limited by the Family Maximum Benefit since $4,120 is more than 50% larger than Jill’s PIA of $2,600?
Until Jill files for her own benefit the only benefit to which Jack is entitled is his own benefit. The spousal benefit on Jill’s work record is only available once Jill files for her own benefit. The workaround for this used to be to “file and suspend”, but that is no longer viable since now the spousal benefit will stop if Jill suspends.
Jack is entitled to $1,300/month (50% of Jill’s PIA) as long as he waits to his own FRA to claim it. The amount can be reduced by filing early, but will not increase by Jack waiting, nor by Jill waiting to file.
The Family Maximum Benefit calculation is a bit complicated. The max is NOT a simple 50% figure. The additional (called auxiliary) benefits that can be paid on one worker’s record are limited to between 50 and 87% of the worker’s PIA. In Jill’s case the max is about 75%. The good news for everyone is that the delayed retirement credits that increase Jill’s benefit as she delays to age 70 do NOT get counted in the Family Maximum. Therefore, since Jack is the only auxiliary benefit being claimed and his 50% spousal is well under the 75% limit there will be no reduction due to Family Maximum Benefit caps.
While we have covered several of these before, we find that spousal benefits are rather confusing for people so it is always nice to have an occasion to refresh and reinforce how these things work.
To listen to our audio post on this topic, please use the play button below.