Why It Makes Sense For The Higher Earner To Wait Longer To Collect
David and Linda are married. David’s primary insurance amount at full retirement age is $1,600 Linda’s is $1,450. They both have an FRA of 67.
If they both wait until 68 to collect, which means their benefits will increase by 8%, David’s benefits will be $1,728 , and Linda’s will be $1,566 .
That extra $12 per month means an extra $144 per year, or $2,880 over 20 years.
In addition, the spouse who lives longer will continue to collect the higher payments.
Chapter : What Are Survivor Benefits
While many people associate Social Security benefits with payouts to retired workers, the Social Security Administration in fact distributes several different kinds of beneifts. These include both benefits for the families of a deceased worker, as well as benefits for people who are disabled and so unable to work.
Social Security survivor benefits provide an important source of income for family members whose workers have passed away. As long as the deceased worker would have been eligible to collect Social Security benefits upon their retirement, their family members will be able to collect them in their stead.
Did you Know?
If the deceased worker would have been eligible to collect Social Security benefits upon their retirement, their family may be able to collect them in their stead.
Social Security Spousal Benefit: Strategy
As of 2016, new Social Security laws may affect how married couples strategize their Social Security claim. Unless you and your spouse made the 2016 cutoff date, you are no longer able to file-and-suspend your benefits for additional credits, nor can you file a restricted application for spousal benefits .
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What Other Benefits Are Available
Some spouses have never worked and therefore have never paid Social Security tax, which means that claiming their partners spousal benefit may be their only source of income in retirement. However, you may be eligible to receive payments from a government pension or foreign employer not covered by Social Security. In this case, you may still be eligible to receive Social Security spouse benefits at a reduced amount.
A Couple With Shorter Life Expectancies May Want To Claim Earlier
How it works: Benefits are available at age 62, and full retirement age is based on your birth year.
Who it may benefit: Couples planning on a shorter retirement period may want to consider claiming earlier. Generally, one member of a couple would need to live into their late 80s for the increased benefits from deferral to offset the benefits sacrificed from age 62 to 70. While a couple at age 65 can expect one spouse to live to be 85, on average, couples who cannot afford to wait or who have reasons to plan for a shorter retirement, may want to claim early.
Example: Carter is age 61 and expects to live to 77. He earns $70,000 per year. Caroline is 59 and expects to live until age 76. She earns $80,000 a year.
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How Much Is The Social Security Spousal Benefit
If youre eligible and can qualify, the spousal benefit can be as much as 50% of the higher-earning spouses full retirement age benefit.
If your spouses full retirement age benefit amounts to $2,000 per month, your spousal benefit at your full retirement age could amount to $1,000 per month.
Its important to note that this benefit cannot be more than 50% of the higher-earning spouses full retirement benefitbut it can be less!
Thats because the benefit is also based on your filing age. Depending on how old you are when you file, the spousal benefit amount will range between 32.5% and 50% of the higher-earning spouses full retirement benefit.
Check out the chart below to get an idea of how the benefit works and what your payment might be if you can take advantage of spousal benefits. The chart assumes that your full retirement age is 67 and your spouses full retirement age benefit is $2,000 per month.
Did you notice the steep penalty for filing early? You receive significantly less in payments if you choose to file sooner rather than wait until full retirement age.
You may have also noticed that the spousal benefit does not increase beyond your full retirement age. When considering your own Social Security benefit, there can be a lot of advantages to waiting to file and delaying when you start receiving payments well past your retirement age, but thats not the case here.
How Do Spousal Benefits Work
Many families are structured around a single head of household whose sole income contributes to the Social Security system. If he or she were to retire, become disabled, or pass away, the non-working spouse would likely face financial hardship without the supporting assistance of spousal Social Security benefits. According to SeniorCareAdvice.com, spouses make up 8.2% of Social Security beneficiaries eligible children and widowers also make up a significant portion of beneficiaries.
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Think About Your Income From Other Sources
If you dont have enough savings and are dependent on Social Security income to pay for necessities, you may have no choice but to collect Social Security as soon as you can. But if you have savings or income from other sources, and can afford to postpone your start date, you will likely benefit by delaying.
Also realize that if you file for Social Security benefits before your FRA but you continue to work, and your earnings exceed certain limits, part of your benefit will be temporarily withheld. In 2013, if you file for benefits at age 62, $1 in benefits will be withheld for every $2 you earn above $15,120. In the year you reach your FRA, $1 is deducted for every $3 you earn above a higher limit, currently $40,080. Once you reach your FRA there is no earnings deduction, and you will get the money previously withheld in the form of a higher benefit.
| Recipient | |
|---|---|
| Unmarried child under age 18 or any age if disabled before age 22 | 50% of PIA, subject to family maximum |
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Chapter : Who Is Eligible For Survivor Benefits From Social Security
- A widow or widower age 60 or older who was and did not remarry before age 60
- A surviving divorced spouse who was married to the deceased for at least 10 years
- A widow or widower of any age caring for the deceaseds child who is under 16 or disabled and receiving benefits on their record
- An unmarried child of the deceased who is: younger than age 18 or age 18 or older with a disability that began before 22
- Parents of the deceased worker who are 1) at least 62 2) were dependent on the deceased for at least half of their income, and 3) whose own Social Security benefit is not larger than that of their deceased child
Did you Know?
If you were married to the deceased for at least9 months, you could be eligible for survivors benefits.
Social Security Spousal Benefits
Social Security is a vital source of retirement income for most women. For this reason, it is important to understand how the spousal benefit works and how it can impact the amount of Social Security income you receive.
As a spouse, you can claim a Social Security benefit based on your own earnings record, or collect a spousal benefit in the amount of 50% of your spouses Social Security benefit, but not both. You are automatically entitled to receive whichever benefit provides you the higher monthly amount. In order to qualify for Social Security spousal benefits, you must be at least 62 years old and your spouse must also be collecting his or her own benefits. Additionally, if you are the higher earner, your spouse can apply to collect spousal benefits based on your work record. It is important to note that claiming a spousal benefit does not impact the benefit amount received by the worker whose earning record is being used.
Taking Benefits Early
- At age 65, you would receive 45.8% of your spouses benefit.
- At age 64, you would receive 41.7% of your spouses benefit.
- At age 63, you would receive 37.5% of your spouses benefit.
- At age 62, you would receive 35% of your spouses benefit.
Recent Changes to Claiming Strategies that Affect Spousal Benefits
Divorced Spouses
Surviving Spouses
Applying for Benefits
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Please Answer A Few Questions To Help Us Determine Your Eligibility
For a number of years, married couples nearing retirement were able to cleverly strategize the timing of their Social Security retirement benefits to get higher lifetime benefits for one or both spouses. The Social Security Administration has put an end to some of the strategies that married couples had used in the past, but spouses nearing retirement age still have many questions about how to get the highest possible joint Social Security benefits. Here are some answers to your questions and a few tips on how to avoid mistakes that could reduce your benefits.
Both Partners In A Marriage Who Worked Enough To Claim Benefits Are Able To Receive Two Checks Spousal Benefits Are A Bit More Complicated
This week the Social Security Administration is expected to release the 2022 Cost-of-living-adjustment, or COLA as it is more commonly known. This upcoming news has raised many questions about Social Security benefits, including how
Regardless of ones marital status, benefit amounts are based on a persons work history. If a worker is married, each spouse is entitled to their total benefit amount because they each paid taxes into the benefits scheme throughout their career.
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Who Is Eligible For Spousal Social Security Benefits
In general, you may be eligible if you are married, divorced, or widowed and your spouse was eligible for benefits.
Those who apply for spousal benefits must have been married for at least one year. Your spouse must also have begun receiving Social Security benefits unless you are widowed. In the latter case, you may be able to receive the full amount of your late spouses benefits as opposed to the spousal benefit, assuming their benefit is higher than yours. However, you will not be eligible to receive your late spouses benefit if you remarry.
Even ex-spouses can file based on your earnings. The requirements for claiming benefits based on your ex-spouses work record include:
- You must have been married at least 10 years.
- You must have been divorced from the spouse for at least two consecutive years.
- You are unmarried.
- Your ex-spouse must be entitled to Social Security retirement or disability benefits.
- The benefit you would receive from your work record would be less than this spousal benefit.
In theory, a person could marry someone new every 10 years and give them a spousal benefit as a parting gift, says Russell D. Knight, an attorney in Chicago. Its better than nothing.
But its not like that money comes out of your monthly benefit check, so rest easy.
A Couple With Similar Incomes And Ages And Long Life Expectancies May Maximize Lifetime Benefits If Both Delay
How it works: The basic principle is that the longer you defer your benefits, the larger the monthly benefits grow. Each year you delay Social Security from age 62 to 70 could increase your benefit by up to 8%.
Who it may benefit: This strategy works best for couples with normal to high life expectancies with similar earnings, who are planning to work until age 70 or have sufficient savings to provide any needed income during the deferral period.
Example: Willard’s life expectancy is 88, and his income is $75,000. Helena’s life expectancy is 90, and her income is $70,000. They enjoy working.
Suppose Willard and Helena both claim at age 62. As a couple, they would receive a lifetime benefit of $1,100,000. But if they live to be ages 88 and 90, respectively, deferring to age 70 would mean about $260,000 in additional benefits.
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Can I Collect Survivors Benefits After Claiming Early Retirement Or Dependents Benefits
Some spouses claim early retirement or early spousal retirement benefits but can then switch to higher survivors benefits when their spouse dies.
Claiming your early retirement or spousal retirement benefits doesn’t affect the amount of your survivors benefits . If you have a considerably older spouse who has a higher earnings record, or your higher-earning spouse is in poor health, you could claim your early retirement or spousal retirement benefit, relying on the fact that you will be able to switch to full survivors benefits in the not-too-distant future.
Note that if your spouse claims early retirement benefits, however, your eventual survivors benefit will be reduced. The amount of the reduction depends on how early your spouse claims their retirement benefits.
This article was excerpted from Social Security, Medicare & Government Pensions, by Joseph Matthews .
Your Spouse Can’t Claim Spousal Benefits Unless You’ve Started Yours
When you’re married, you have the choice of claiming either your own retirement benefits or getting spousal benefits.
Spousal benefits are based on your partner’s work history, and equal up to 50% of your partner’s primary insurance amount . There’s just one problem: They won’t become available until the primary earner whose work record spousal benefits are based on has claimed their own retirement benefits. In other words, if a husband wants to claim spousal benefits based on his wife’s earning history, his wife would have to start her retirement benefits first, or vice versa.
Sometimes, it still makes sense for the higher earner to put off a benefits claim, even if that means spousal benefits can’t be started. After all, as mentioned above, waiting would increase survivor benefits. But in other circumstances, the higher earner may want to start checks ASAP to make spousal benefits available.
This could make sense, for example, when one spouse didn’t work enough to get any retirement benefits at all. In this circumstance, the couple would have no Social Security checks coming in until the higher earner claimed — but once that happened, two checks could start coming.
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Does Married Filing Jointly Affect Social Security Benefits
No. Even if you file taxes jointly, Social Security does not count both spouses’ incomes against one spouse’s earnings limit. It’s only interested in how much you make from work while receiving benefits. … Regardless of how much your spouse earns, it will not affect how much is held back from your benefit.
What Are The Spousal Rules For The Ssi Program
SSI, because it is need-based and has income limits, has different rules when it comes to two spouses who are both disabled. It is technically possible for both spouses to receive SSI. However, the income guidelines make it difficult for both to qualify.
Each applicant is subject to an income limit and part of the money their spouse earns counts toward that limit. This is true even if the spouses only source of income is SSI.
The math can be a little bit complex. Confounding the issue further is the fact that the program allows for certain income exclusions and expense deductions when calculating your total monthly income. Our lawyers can evaluate your household finances and advise you on how to maximize benefits between you and your spouse.
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Social Security Rules For Widows And Widowers
If your spouse dies, you may be able to collect a Social Security survivor benefit as early as 60 years old. Widows and widowers who have reached their FRA will be eligible for the maximum benefit amount100% of the deceaseds benefit amount. If you claim a survivor benefit before your FRA, it can be reduced to 71.5 99% of what the full amount would have been, depending on your age.
Widows and widowers have the option to restrict their application to file for either their survivor benefit or their own benefit, and then later switch to the other. For example, if your SS benefit will be higher at age 70 than your survivor benefit, you could claim the smaller benefit for a few years as a widow then switch to your own benefit once youve maximized its amount.
Can A Second Wife Get Social Security From Her Husband
Yes, a second wife can get Social Security benefits based on the earnings record of her husband. Even if the husbands ex-spouse is receiving benefits, this does not prevent the current spouse from receiving benefits as well. So, when can a spouse claim spousal benefits? To qualify, the second wife must meet all the eligibility requirements for spousal benefits. This means that the marriage must have lasted at least one year, and the husband must already be receiving Social Security retirement benefits. In addition, the second wife must be at least 62 years old. The age limit does not apply if the second wife is caring for a child under 16 or a disabled child.
For purposes of Social Security retirement benefits, these same rules apply to a spouse regardless of how many ex-spouses the primary earner has. For instance, a third or fourth wife could receive Social Security from her husband as long as she meets the rules mentioned above. The wife also does not need to have her own work history. As long as the husband is receiving benefits, the marriage has lasted at least one year, and the wife is 62 or older, then she can receive benefits.
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