When should my wife take a spousal benefit from Social Security?

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Q. So the time has come. I have retired and I’m deciding when collect Social Security. I am 65 and my wife is 63 ½. She is retired and has not taken Social Security. If I take Social Security now, how is her spousal benefit calculated on? I am considering taking my benefit now as waiting until full retirement age is not a huge difference and it would take 16 years to make up the difference. The longevity on the male side of my family is not great with 78 being the oldest of my ancestors.
— Retired

A. Congratulations on your retirement.

We’re glad you’re thinking carefully about how your benefit amount, and your wife’s, will be affected by your timing.

How much your spouse will receive depends on a number of factors, including your age, the amount of your spouse’s benefit, and whether you have other retirement benefits available to you, said Matthew DeFelice, a certified financial planner with U.S. Financial Services in Fairfield.

Your wife is eligible for half of your benefit amount as long as you wait until your full retirement age to apply, he said, noting that the earlier you file, the less you’ll get.

He said a person’s spousal benefit is based upon their partner’s “normal” benefit amount, but the amount they receive will depend upon when they 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,” he said. “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, DeFelice said.

At your full retirement age — 67 in this example — you’d be eligible for the maximum, which is 50% of your spouse’s full benefit. So there is no incentive to file for spousal benefits later than your own full retirement age, he said.

When you apply for spousal benefits, you will also be applying for benefits based on your own work history, DeFelice said. If you’re eligible for benefits based on your own earnings, and that benefit amount is higher than your spousal benefit, that’s what you’ll get. If it is lower, you’ll get the spousal benefit, but you won’t receive both.

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, he said.

The calculation gets a bit more complicated if you are eligible to receive benefits from a government pension or foreign employer that is not covered by Social Security, he said. In that case, you may still be eligible, but the amount will be reduced.

“Depending on your circumstance, you may be eligible to receive spousal benefits early without reductions,” DeFelice said. “Most notably, a spouse can receive benefits at any age once their partner has filed if they are caring for a child under age 16 or who was disabled before age 22, and is entitled to benefits. It should be noted that you will still need to be married for at least one year before applying for benefits.”

The bottom line is this: maximizing your spousal Social Security benefits is all about the timing, and the timing is determined by your circumstances as a couple, he said.

It may help to consult with a financial planner who is versed in the Social Security rules and can help map out what your cash flow will look like in retirement before making a decision.

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This story was originally published on Aug. 26, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.