Savvy Senior: Understanding Social Security spousal benefits

Dear Savvy Senior,

How do Social Security spousal benefits work? My wife, who’s approaching age 62, has had a few small-paying jobs over the years, but spent most of her time as a homemaker. What is she entitled to?

-Primary Breadwinner

Dear Breadwinner,

Spousal benefit questions are among the most frequently asked and confusing parts of Social Security. The rules that govern qualifying and claiming are knotty, and there are many exceptions. But understanding how these benefits work is crucial for maximizing your family’s retirement income. Here’s what you should know.

What Are Spousal Benefits?
Social Security spousal benefits are designed to provide retirement income to spouses who either didn’t work or worked sporadically/part-time and earned significantly less than their spouses over their working lifetime. A stay-at-home parent is a good example of a spousal benefit recipient.

Who’s Qualifies?
To qualify for spousal benefits, you and your wife must meet three conditions: Your wife must be at least age 62; you must be married for a year or more; and you must already be collecting your retirement benefits.

Different rules apply for ex-spouses. Ex-spouses (if you were married for at least 10 years and are not remarried) can receive a spousal benefit based on an ex-spouse’s record even if your ex has not yet filed for their own benefits, but your ex must be age 62 or older.

How Much Are Spousal Benefits?
The amount your wife would get for spousal benefits will depend on your earnings history and her claiming age.

The maximum spousal benefit is 50 percent of your Primary Insurance Amount (PIA), which is that amount you’re entitled to at full retirement age benefit (FRA). But your wife will only get that much if she waits until her full retirement age to file, which is 67 if she was born in 1960 or later.

Unfortunately, spousal benefits cannot be increased by her waiting beyond FRA, but they are reduced by taking them early. So, for example, if your wife were to start collecting her spousal benefits at age 62 (the earliest possible age), she would collect only 32.5 percent of your PIA.

To calculate exactly how much your wife’s spousal benefits would be reduced by taking them before her FRA see SSA.gov/OACT/quickcalc/spouse.html.

You also need to know that because spousal benefits are based on your PIA, even if you (the primary earner) retire early, before you reach your FRA, your wife’s spousal benefit will not be reduced. Just as they will not increase if you delay claiming your benefits beyond your FRA.

You should also note that if your wife worked and is entitled to benefits on her own work record, but it’s less than what she’s entitled to as a spouse, Social Security will pay her the higher of the two amounts, but not both.

Survivor Benefits
In addition to spousal benefits, Social Security also pays survivor benefits to spouses and ex-spouses starting at age 60 (50 if disabled).

So, if your wife outlives you, she’ll be able to switch from her spousal benefits to survivor benefits and receive a higher payment. Survivor benefits range between 71.5 and 100 percent of the deceased’s benefit, based on your wife’s age when she claims.

There is, however, one exception. Surviving spouses and ex-spouses that are caring for a child (or children) of the deceased worker, and they are under age 16 or disabled, are eligible to receive 75 percent of the worker’s benefit amount at any age.

Online Calculators
There are several online calculators that can help you and your wife figure out the best time to claim your benefits to ensure you get the highest possible lifetime payout. One that’s completely free to use is OpenSocialSecurity.com. Or for a more thorough analysis, use MaximizeMySocialSecurity.com. This tool, which costs $49 for a year, will run what-if scenarios based on your circumstances to find your best strategy.

Send your questions or comments to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, email questions@savvysenior.org, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.