Q. I will be 67 in September 2018 and my wife will be 62 in May 2018. I do not plan on taking Social Security until I turn 70. How will her spousal benefits work? Will they continue when I die, and are benefits willable?
— Planning ahead
A. We’re glad you’re asking questions now so you can plan.
You don’t mention in your question whether your wife has a work history under Social Security. To answer your question, we’re going to assume that she may have. We’ll also assume the Government Pension Offset doesn’t apply to you and that you’re not collecting any other Social Security benefits that could bring the family maximum benefit into play.
Before we get to your specifics, here are the general rules you need to know.
For most people, the normal Social Security retirement age — called your full retirement age, or FRA — is between 66 and 67, depending on the year in which you were born, said Gene McGovern of McGovern Financial Advisors in Westfield.
He said assuming that you’ve worked long enough to earn sufficient credits in the Social Security system, at full retirement age you’re eligible to receive a monthly benefit that’s known as your primary insurance amount, or PIA. Monthly retirement benefits are paid for life.
Regardless of your FRA, you can begin collecting Social Security at any age between 62 and 70.
“If you begin earlier than your FRA, your monthly benefit is permanently reduced,” McGovern said. “If you wait beyond your FRA, as you propose to do, benefits increase by 8 percent of your PIA each year that you delay until age 70.”
There’s no benefit to delaying beyond age 70, he said.
In addition to paying retirement, disability and survivors benefits, Social Security also provides for spouse’s benefits, which is the focus of your questions.
Provided that a spouse has been married to you for at least one year, or is the parent of your child, he or she qualifies, McGovern said. That’s true whether or not your spouse has a work history under Social Security of his or her own.
The amount of a spouse’s benefit is generally equal to 50 percent of the other spouse’s Primary Insurance Amount (PIA), he said.
“Like retirement benefits, spouse’s benefits are permanently reduced if you claim them before your FRA,” he said. “Unlike retirement benefits, though, spouse’s benefits are not increased if you wait beyond full retirement age to claim them.”
Note also that your benefits as a spouse don’t include any delayed retirement credits that your husband or wife may receive because they waited to collect benefits until after their FRA, he said. Spouse’s benefits are limited to 50 percent of your husband’s or wife’s PIA at full retirement age.
McGovern said a husband or wife may claim spouse’s benefits if he or she is at least 62 years old, provided that the other spouse is receiving retirement benefits.
“In other words, you can’t claim spousal benefits unless your wife or husband has already filed,” he said.
It’s also possible to receive spouse’s benefits earlier than age 62 if you’re caring for a child under 16 or who is disabled.
Now, if you’re a spouse and have a work history of your own, Social Security always pays your own retirement benefits first, he said. It then compares that amount with your benefits as a spouse.
If your spouse’s benefits are higher than your retirement benefit, Social Security pays you the difference on top of your retirement benefit, he said. On the other hand, if your own retirement benefits are higher than your spousal benefits, Social Security will simply pay your retirement benefit and no spousal benefit.
Here’s an example: At full retirement age, Jane’s primary insurance amount/monthly retirement benefit from Social Security is $900 per month. Her husband Mark’s PIA is $2,000 per month. Jane is eligible for a spouse’s benefit equal to one-half of Mark’s PIA, or $1,000 per month, which is greater than her own retirement benefit. If Jane files for benefits at FRA, Social Security will pay her own $900 retirement benefit plus her $100 spouse’s benefit ($1,000 – $900), for a total of $1,000 per month.
In your case, given your birth dates, your FRA is 66 and your wife’s FRA is 66 years plus 4 months, McGovern said. When you begin collecting delayed Social Security benefits at age 70, in September 2021, your wife will be 65 years and 4 months old, exactly one year younger than her FRA.
If your wife files for benefits at that time, McGovern said, she’ll be eligible for spousal benefits equal to 50 percent of your PIA — not your delayed benefit amount at age 70.
“However, because your wife would be collecting her spouse’s benefit one year before her FRA, the benefit will be permanently reduced by approximately 8.2 percent — that is, she would collect just under 92 percent of the spouse’s benefit she would receive at her full retirement age,” he said.
McGovern offered another example. Let’s assume that your wife is not insured for retirement benefits on her own work record. If your PIA at age 66 is $1,800 per month, and you wait to file for benefits until age 70, you’ll receive $2,376 a month (adjusted upward for any inflation between 66 and 70). Your wife’s spouse’s benefit at her full retirement age would be 50 percent of your PIA of $1,800, or $900 per month. However, if she begins receiving that spousal benefit when you turn 70, she would receive approximately $825 per month (a $75 reduction) because she’s claiming it a year before her FRA.
Here’s what happens at death.
“If you die before your wife, your wife will receive a survivors benefit that’s equal to the greater of her spouse’s benefit or the amount you were receiving at your death,” he said. “That’s another good reason for the higher earning spouse to wait until age 70 to collect benefits, since the surviving spouse receives the highest possible benefit.”
Social Security benefits cease at death. They may not be included in a will.
There’s nothing you need to do until the point that you wish to begin receiving Social Security benefits, McGovern said.
At that point, you can file for retirement or spousal benefits online, in person at your local Social Security office, or by calling (800) 772-1213 to make an appointment. You may apply four months before you want your benefits to start.
For more information on Social Security, visit the Social Security Administration website.
Email your questions to moc.p1526915086leHye1526915086noMJN1526915086@ksA1526915086.