When should my spouse take her benefit?

[DavidP909803]

Social Security wasn't much help on the phone so I will try here. 

I am 67, waiting for 70 before applying for benefits.  My wife of four years is five years younger (62). 

I understand that half of my FRA amount would be higher than she would receive on her own record.  Logically, she will take the spousal benefit.  My question is what would be the best course of action for her?  Should she start on her own record and switch to mine at her FRA? Will her spousal benefit on my record also be reduced since she started early on her own record?  I welcome any opinions or options that can be pointed out.

As a side question, do I need to be drawing before she can apply for spousal payments?  

Thanks to all!

[Tonster521]

@DavidP909803 With regard to your initial question regarding your spouse's SS Benefits, my suggestion is that you need to evaluate all of the applicable variables that affect you and your spouse's income. Making SS Benefit elections without considering other benefits (i.e., pensions, annuities, etc.) as well as other sources of income both passive (i.e., dividends, interest, etc.) and active (i.e., business income, rental income, etc.) may not be the best approach. Because everybody's situation is different, the SSA cannot provide individual strategies for every situation. So, are both of you still working? If not, what are your sources of income? If you are using personal assets or a combination of personal assets and pension/annuities to "pay the bills" will that reduction of personal assets affect your heirs, if any. And, lets not forget, your spouse's heirs, if any, and, does your spouse, if not working, want some spending money (mad money) to do whatever. I am providing a link to the reduction factors should your spouse elect to start her Old Age (aka retirement) Benefits prior to her Full Retirement Age (FRA) or age  67 https://www.ssa.gov/oact/quickcalc/earlyretire.html At age 62, her Old Age or Retirement Benefit is reduced by 30%. Her Spousal Benefit ( based on your earnings) will be reduced as well if she elects to begin SS Benefits before FRA. Remember, as Gail pointed out, you must be receiving SS Benefits in order for your spouse to receive any Spousal Benefits. So, you need to determine the cost of delaying your SS Benefits as well as the cost of delaying your spouse's Spousal Benefits. Some folks may just simply add the amounts for all months delayed and use 0% as the discount rate to determine the future value and when that value may be recouped. However, I would suggest using at least 3% rather than 0% to determine the future value or cost for delaying SS Benefits. The 3% discount rate is reasonable.

[GailL1]

@DavidP909803 

Gonna answer your questions but in a different order -

You asked:  As a side question, do I need to be drawing before she can apply for spousal payments?  

YES - you have to be drawing your own benefits BEFORE she can claim Spousal benefits.  

You asked:  Should she start on her own record and switch to mine at her FRA?

YES, she can do that - .  She can draw her own benefits based on her own work record until you begin your benefits and then switch to her Spousal benefits.

Keep in mind that if you wait to 70 to get your benefits, her Spousal benefits DO NOT include any delayed retirement credits you get on your benefits - the 8% you get per year for delaying your benefits.  

Her Spousal benefits are based solely on your benefits at FRA (50% of yours) BUT reduced by any early benefit claiming that she does (see next question).

You asked:  Will her spousal benefit on my record also be reduced since she started early on her own record? 

Yes, any reduction % that she gets when she files for her own benefit because she is filing at LESS THAN FRA is carried forward to her Spousal Benefits - so if she begins receiving her own benefits at 62 - or any age less than her FRA - she will get less than 50% of your benefit as a Spousal Benefit because that 50% is reduced according to when she filed for her own benefit.