AARP Online Community and Discussion Forums - Spousal benefit question

DeanK32743 · ‎02-18-2019

Hi. I’m trying to figure out how spousal benefit works for my case.

Spouse is turning 62. If She claims at 62 benefit is $819. FRA claim is $1123.

I’m 57. If I claim at 62 benefit is $1123. FRA claim is $3044.

If my spouse claims at 62 and I claim at 62 what is spousal benefit amount at her FRA? Is it $819 + ($3044/2 - $1123) = $1218?

Thank you. Let me know if there’s an online calculator that can answer as well. This is confusing to wade through to say the least.

GailL1 · ‎02-18-2019

@DeanK32743 wrote:
Hi. I’m trying to figure out how spousal benefit works for my case.

If my spouse claims at 62 and I claim at 62 what is spousal benefit amount at her FRA? Is it $819 + ($3044/2 - $1123) = $1218?

First let's go over the "Deemed Filing" that I believe will apply in your case - perhaps making the rest of your post mute.

If my birth year calculations are right based on the ages you have disclosed, both of you will be affected by the "deemed filing" rule passed in 2015 for people who were borned ON or AFTER January 02, 1954. It is partly because of this rule that your planning is going astray.

Social Security - Benefits Planner: Deemed Filing

Simply put, if a person was born on or before January 02, 1954, when they file for benefits earlier than FRA (full retirement age) - they are filing for either benefit that is higher - either their own benefit OR a spousal benefit. If the spousal benefit is higher, they get that one but their own benefit stops growing - NO MORE taking a spousal benefit and letting your own grow until later on (until age 70) and then switching.

Thus when you make the decision to file for early benefits if your birthday is on or after 01/02/1954 - you will only get the higher one for which you qualify and that is it because you will be "deemed filing for both and receiving the higher one".

Now if you are asking about the amount of reduction filing for early benefits vs waiting until FRA -

one thing you both have to remember is the difference in your age (birth year). The early retirement age has never been changed - it is the same for both of you - 62. However each of you have a different FRA and as the span between the early age of 62 and your FRA becomes greater, then the reducrtion % for filing early increases because there are more months when you will be receiving benefits early - the % of reduction increases for the younger person increases more than for the older person.

Social Security Benefits Planner - Benefits By Year Of Birth

Social Security Benefits Planner: Retirement | If you were born between 1943 and 1954

Unless I am wrong about the "deemed filing" rule being applicable to each of you - there is no way this (your) question could ever happen.

If my spouse claims at 62 and I claim at 62 what is spousal benefit amount at her FRA? Is it $819 + ($3044/2 - $1123) = $1218?

Do you understand OR have I misinterpreted your post?

What are you trying to accomplish in your benefits planning? I am confused.

DeanK32743 · ‎02-18-2019

Hi. Thanks for the input. Honestly I don’t understand. This is over my head so I may just try to find someone that specializes in SS. I’m trying to understand how the spousal benefit works on my case if my older spouse with lower income claims social security this year at age 62. I get the reduction in benefits part and that you get more each year waiting up to age 70. I don’t understand the impacts to spousal benefit by claiming early. Just trying not to make a dumb mistake that I’ll regret later. Thanks again.

GailL1 · ‎02-18-2019

@DeanK32743 wrote:
. . . . . I’m trying to understand how the spousal benefit works on my case if my older spouse with lower income claims social security this year at age 62. I get the reduction in benefits part and that you get more each year waiting up to age 70. I don’t understand the impacts to spousal benefit by claiming early. Just trying not to make a dumb mistake that I’ll regret later. Thanks again.

If your spouse files for her own benefits this year - she is filing for early benefits on her own record.

I figure from the info given, she was born in 1957 so her FRA (full retirement age) is 66 and 6 months - There are 54 months between age 62 and her FRA so her full retirement benefit is going to be REDUCED 27.5% because she is claiming her benefit early (at age 62).

This comes from Social Security:

Social Security Benefit Planner - Full Retirement and Age 62 Benefit By Year Of Birth

She cannot claim Spousal benefits on your record because you have to be retired for her to claim a Spousal benefit. Her only option now is her benefit filed early (reduced).

I figure from the info given that you were born in 1962 - you will not turn 62 until 2024. Your FRA is 67 - from the same SS page linked above -

There are 60 months between your age 62 and your FRA of 67 - if you file for early benefits at age 62, your benefit based on your own record will be REDUCED 30.0%.

Since both of you were born after January 1954, both of you are covered under the deemed filing rule established in 2015.

Conclusion:

1. Your wife at 62 ONLY has one choice and that is to file for her own benefit early since you are not retired yet.

2. Since she is the low income earner, in order for her to get a Spousal benefit based on your record when you retire - she will have to wait to file for ANY benefit until you reach age 62 and decide to retire early. Your benefit at the age of 62 will be $ 3044 reduced by 30% = $ 2140.

3. At that time, she will have a choice of benefits - a final choice because once she picks her type of benefit that is it. She will be deemed to have filed for all her benefits (deemed filing).

4. So when you are 62, you will receive your own benefit less the reduction of 30% because you are filing for early retirement.

5. If your wife has waited to file for her benefits, she will have a choice (either / or ) of :

filing for her own benefit - at that time she will be 67 - a little over her FRA so her own FULL benefit would not be reduced, in fact she will get a tiny boost of about 6 months. - You said that would be $ 1123 + that extra 6 months for waiting over her FRA of 66 and 6 months.
OR filing for a Spousal benefit based on your early retirement age of 62. According to the chart in the link above, that will be a Spousal benefit of 50% of YOUR benefit. The maximum benefit for the spouse is 50 percent of the benefit the worker would receive at full retirement age. The percent reduction for the spouse should be applied after the automatic 50 percent reduction. Percentages are approximate due to rounding.(this is footnote #5 on the linked page above)
You said your benefit at FRA was $3044 - so the math goes like this $ 3044 less 50% spousal benefit = $ 1522 less 35% because of your early filing ( - $ 533) = a spousal benefit of $989.

Hands down mostly because of the age difference and who is the higher earner - HER own benefit at that time would be greater because she has already reached FRA and your benefit is being reduced because of early retirement.

DeanK32743 · ‎02-18-2019

Thank you so much. This is exactly the information I need. I have searched high and low, tried various calculators, and never found a clear answer. Now we just have to decide if my spouse claims at 62 or waits. That’s a different question but I do see lots of opinions out there.

GailL1 · ‎02-18-2019

@DeanK32743 wrote:
Now we just have to decide if my spouse claims at 62 or waits. That’s a different question but I do see lots of opinions out there.

Heck if she waits until that FRA of 67 - why not just wait until she hits 70 - That would be her very best benefit because she will earn a delayed retirement credit of about 8% per year. She would increase her benefit at FRA ($ 1123) by about $ 90.00 + a month for those (3) years.

Just another option.