Mailbag: Reduction of Social Security Spousal Benefits

answers to social security questions

A reader asks a question about the reduction of Social Security Spousal Benefits

QUESTION:

Will my spouse’s Social Security benefits be reduced?

My spouse began collecting her Social Security benefits at age 64. I plan on retiring at 67, later in 2017. When I retire, I will begin collecting SS on my earnings. The plan is to have my wife switch from collecting on her earnings to collect half of mine because mine is greater. Will she be able to collect half of my benefit, or will her benefit be reduced because she started collecting early on her earnings?

ANSWER:

Good question! It would seem relatively straightforward, but then again…we’re dealing with the Social Security Administration.

Here’s the short answer:

Your wife’s spousal benefit is actually comprised by two separate benefit payments. First, there is her own benefit. Second, she has the ‘spousal top off.’ She becomes eligible for her own benefit at age 62, and eligible for the spousal benefit when you file for your own benefits.

Here’s how it’s calculated.

Her FRA benefit is compared to 50% of your FRA benefit. If hers is less than that number, it is ‘topped off’ to bring the total up to 50% of yours. Since she filed early, her own benefit will be reduced. However, the spousal top off will not be reduced if you file for your own benefits at or after her full retirement age.

Why?

In order for her to receive a spousal benefit from your work record there is a trigger…you must file for your benefits. If you haven’t filed, she isn’t eligible to collect from your record.  Once you file, she becomes eligible for a spousal benefit and her reduction for filing age is determined at her date of first eligibility. If she is full retirement age when you file (and she thus become eligible), there is no reduction.

Hope this helps!