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Welcome to Ask Money Talks News, a series where we answer financial questions submitted by our readers and listeners. Today, we’re exploring a common query about Social Security benefits for married couples—specifically, how spousal benefits work after a significant rule change in 2015.
Reader’s Question
J. Marko writes:
“I am 64, and my wife is 62. She wants to start receiving her Social Security payments, which would be about $1,100 per month if she claims now. My full retirement age (FRA) benefit will be about $2,900 per month. I’d like her to take advantage of the spousal benefit due to the difference in our payments. If she starts claiming benefits now, will she be able to apply for the spousal benefit when I claim at my FRA?”
Thanks for your question, J. Marko! Let’s break down how spousal benefits work and what your options are.
Understanding Social Security Spousal Benefits
Spousal benefits allow a lower-earning spouse to receive up to 50% of the higher-earning spouse’s full retirement benefit. This can be a smart strategy for couples where one spouse has significantly higher earnings over their career.
However, claiming benefits before reaching your full retirement age (FRA) comes with some key considerations.
What Happens If Your Spouse Claims Early?
If your wife claims her Social Security benefits now at age 62, she will receive a reduced benefit based on her own work record. The reduction happens because she is claiming before her FRA, which for someone her age is likely around 66 or 67.
Here’s the important part:
- Once she begins receiving her own reduced benefit, that amount remains the same—even when you start claiming your Social Security benefits at your FRA.
- She won’t automatically switch to the spousal benefit amount (up to 50% of your benefit) right away.
When Can She Apply for the Spousal Benefit?
Your wife can apply to increase her benefit to the spousal benefit amount, but only when she reaches her own FRA.
This process is called deemed filing, a rule introduced in 2015. Under this rule, when your wife applies for the spousal benefit, she must apply for both her own benefit and the spousal benefit at the same time.
Here’s how it works:
- At her FRA, she will keep receiving her reduced benefit amount.
- She can then apply for the spousal benefit, which will be calculated as an addition to her reduced amount—not a replacement.
Planning Your Social Security Strategy
Claiming Social Security benefits early can work in certain situations, especially if one spouse plans to retire sooner. However, it’s important to understand the long-term implications of reduced benefits.
In your case, J. Marko, this strategy can help your wife receive income earlier, but the reduction in her benefits will remain throughout retirement. If you’re uncertain, consulting a financial advisor can help ensure you’re making the best choice for your situation.
Final Thoughts
Social Security benefits can be confusing, especially with changes to the laws over the years. Understanding the timing and rules for spousal benefits is essential for maximizing your retirement income.
If you’re in a similar situation, take the time to research your options or speak with an expert. A well-planned Social Security strategy can make a big difference in your financial future.
