Social Security Benefits and Spouses

Last month’s discussion on coordinating Social Security benefits among married couples generated a lot of interest. Let’s take a few minutes to review the basic rules of this complicated issue, and I will add some references to some key sources.

To keep things simple, we’ll assume the wife is the lower wage earner. That will avoid constant references to “the spouse” and the “other spouse” or “higher-earning spouse.” The rules apply regardless of which spouse had the higher earnings.

A wife can begin receiving retirement benefits as early as 62. If the wife begins benefits before her full retirement age (regardless of whether the benefits are based on her work record or her husband’s), the benefits will be reduced permanently. The reduction will depend on how many months early the benefits begin.

A wife who begins benefits at her full retirement age can receive a benefit equal to one-half the full retirement amount of her husband’s.

A wife also may receive benefits based on her own earnings record. If that retirement benefit is less than one half of the other spouse’s retirement benefit, then the spouse will receive a combination of the two benefits so that the total equals the higher amount. In effect, a wife receives the higher of her earned benefits and one half of her husband’s retirement benefits. But Social Security likes to phrase the benefit as a spouse receiving his or her own benefit plus a benefit based on the other spouse’s record.

A wife should not have to decide which is the higher benefit. Social Security says it will check its records to ensure a retiree receives the higher of the two benefits. Mistakes can be made, however, so if it appears that a spouse is receiving less than the maximum benefit call Social Security to ask about the difference.

Here is the part that excites many of our readers.

If a wife has reached full retirement age and is eligible for a benefit based on either her husband’s earnings records or her own earnings record, he or she has a choice. The wife can choose to receive only the spouse’s benefits now (one half the husband’s benefits) and delay receiving her own retirement benefits until a later date. By delaying her own retirement benefits, they will increase because the benefits begin after full retirement age, qualifying for delayed retirement credits. Note that this result is possible only when the wife applies for spousal benefits at full retirement age or later and files for only the spousal benefit. Before full retirement age a person is deemed to have filed for both spousal and retirement benefits.

Last month we discussed instances in which someone begins receiving retirement benefits, and later decides it would have been better to wait and receive a higher benefit. In those cases, the benefits received have to be repaid to begin the higher benefit. In this last case, however, the spouse does not have to repay the spousal benefits received before electing to take her own earned retirement benefits. Repayment is required only when a person begins benefits at one age, and then decides it would have been better to wait until a later date and wants future benefits recalculated based on the later date.

The Social Security web site is very helpful in researching these issues. First, be sure to spend some time with the site’s calculators. They let you view benefits for you and your spouse under different scenarios. Also, there are several helpful publications available on the site, though they are not always easy to find. Check the following addresses to fully research these issues:
http://ssa.gov/retire2/yourspouse.htm
http://ssa.gov/pubs/10084.html
http://ssa.gov/pubs/10035.html

If you have any doubts about the rules, call Social Security to discuss your situation.