Hey everybody! I hope you're doing great. I wanted to make a quick video because I received an email from a client the other day. He knows who he is, and we were going back and forth a little bit because he had some questions about Social Security.
Specifically, he asked, "Is it true that my wife could receive 50% of my benefit after starting with her own benefit and then switching?"
As we were emailing back and forth, I gave him some broad-brush overviews at first. Then I really got into the weeds to help clarify what this actually means. I thought, "Maybe other clients could benefit from this explanation, too." So I put together a slideshow for you. Let me share my screen.
The question is whether, if my spouse or I file for Social Security at age 62, that reduces my spouse's future Social Security benefit. I thought this was a really interesting conversation to have and a great opportunity to educate more people about how these rules work.
Many people don't realize that your spouse can receive up to 50% of the higher-earning spouse's Primary Insurance Amount (PIA), whether they worked outside the home or not. That's how the system works today. I also mentioned to this client that things could certainly change in the future. None of us knows what Congress may do, but under today's rules, yes—a spouse can receive up to 50%.
So what we're exploring is this: What happens if the higher-earning spouse files at age 62, 67, or 70? How does that affect the younger or lower-earning spouse's benefit?
The short answer is yes—you can still receive a spousal benefit. If the higher-earning spouse files early, it does not reduce the other spouse's maximum spousal benefit. I'll walk through some examples in just a moment.
However, if the spouse claiming the spousal benefit files early—say at age 62—then both their own retirement benefit and the spousal portion of their benefit can be permanently reduced. That's really the key takeaway, but let's walk through a few examples because there are some important nuances.
Most people assume that a spousal benefit is simply half of whatever check the higher-earning spouse is actually receiving. That's actually not true.
Instead, the spousal benefit is based on half of the higher-earning spouse's Primary Insurance Amount (PIA)—the amount they're entitled to at their full retirement age. Under the current rules, full retirement age is 67 for most people.
So, in this example, if the higher-earning spouse's PIA is $3,000 per month, the maximum spousal benefit is $1,500. If that spouse files early at age 62 and only receives $2,100 per month, the spousal benefit is still based on the original $3,000 PIA—not on the reduced check. That means the spouse's maximum benefit is still $1,500, not $1,050.
That's a really important distinction because it can affect when it makes sense to claim Social Security.
There are three rules to keep in mind.
First, the benchmark is always 50% of the higher-earning spouse's PIA.
Second, your own retirement benefit is paid first. If your own benefit is less than your spousal benefit, you may receive what's called a spousal excess benefit to bring you up to the higher amount.
For example, you could start your own retirement benefit at age 62 and then begin receiving the spousal excess once you're eligible at full retirement age. There are strategies like this that can sometimes help maximize lifetime Social Security benefits.
Third, if you claim your own retirement benefit early—or claim the spousal benefit early—those reductions are generally permanent. That's why these decisions are so important.
Let's look at an example.
Suppose the higher-earning spouse has a PIA of $3,000 per month. Half of that is $1,500.
Now suppose the other spouse has their own PIA of $1,000 per month. Since $1,000 is less than $1,500, they're eligible for a $500 spousal excess benefit.
If that spouse claims benefits before full retirement age, any reduction is based on when they claim, not on when the higher-earning spouse claims.
There are, of course, many different situations and exceptions, but we're keeping today's discussion focused on the basics.
Now let's look at another example.
Suppose the higher-earning spouse has a PIA of $3,000 but files at age 62, reducing their monthly benefit to $2,100.
If the other spouse waits until full retirement age to claim the spousal benefit, they still receive the full $1,500 spousal amount. It doesn't matter that the higher-earning spouse is only receiving $2,100. The calculation is still based on the $3,000 PIA.
However, if the lower-earning spouse claims the spousal benefit at age 62, 63, 64, 65, or 66, their benefit will be permanently reduced based on when they claim.
Also, remember that if the lower-earning spouse has their own retirement benefit that's larger than the available spousal benefit—for example, $2,200 per month—they simply receive their own benefit instead. You're never forced to take the spousal benefit if your own benefit is higher.
Now let's change the example.
Suppose the higher-earning spouse waits until age 70 and now receives $4,100 per month instead of $3,000.
Even though their own benefit increased significantly by delaying, the maximum spousal benefit is still based on their PIA of $3,000. That means the spousal benefit remains $1,500.
One important distinction, though, involves survivor benefits.
When one spouse passes away, the surviving spouse generally keeps the larger Social Security benefit and loses the smaller one.
So, in this example, suppose the lower-earning spouse is receiving $1,500 per month and the higher-earning spouse waited until age 70 and is receiving $4,100 per month.
If the higher-earning spouse passes away first, the surviving spouse stops receiving the $1,500 benefit and instead continues receiving the $4,100 survivor benefit.
This is one of the main reasons it can make sense for the higher-earning spouse to delay claiming Social Security. Delaying can create a larger survivor benefit for the surviving spouse.
Now remember, if the lower-earning spouse also worked and has their own benefit—say $1,000 per month—there is a $500 spousal excess benefit that brings them up to the $1,500 maximum.
Again, this is one of those areas where Social Security rules could certainly change in the future. Everything we're discussing today reflects the current rules.
Now, let's look at how filing age affects the spouse's benefit.
Suppose the maximum spousal benefit is $1,500 per month.
If the spouse claims at age 65, their benefit is reduced to approximately $1,283 per month.
If they claim at age 62, their own $1,000 retirement benefit is reduced to about $700, and the $500 spousal excess is reduced to approximately $325. That gives them a total monthly benefit of about $1,025.
You can also mix and match.
For example, someone could begin their own retirement benefit at age 62 and later begin receiving the spousal excess once eligible. In that example, they could receive approximately $1,200 per month.
There's generally no advantage to waiting until age 68, 69, or 70 to claim the spousal benefit itself. While your own retirement benefit may continue to grow, the spousal excess does not increase beyond full retirement age. The $500 spousal excess stays locked in.
So, in general, filing at age 62 reduces the higher-earning spouse's own monthly benefit, but it does not reduce the benchmark used to calculate the spouse's benefit. The spousal benefit is still based on 50% of the higher-earning spouse's Primary Insurance Amount, assuming that's higher than the lower-earning spouse's own retirement benefit.
Also, remember that if the lower-earning spouse claims before full retirement age, both their own retirement benefit and the spousal excess benefit may be permanently reduced based on when they file.
I hope this helps make things a little clearer.
As always, if you have questions or would like to discuss your own situation, I'd love to sit down with you and help build a Social Security claiming strategy that's tailored to your goals.
Remember, this video is educational. The goal isn't simply to claim early or delay as long as possible. The goal is to choose the strategy that best supports both spouses throughout retirement.
Your health, your family history, your life expectancy, and your financial goals all play an important role in making this decision.
We also focused today on situations where both spouses are living. Survivor benefits add another layer of planning, and it's always a good idea to confirm your specific situation with the Social Security Administration.
If you have questions, I'd love to help you evaluate your options and build a claiming strategy that's right for you.
Thanks so much for watching, everyone. Have a great day!