Mike Hoeflich
Social Security and Spousal Benefits: What You Need to Know
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Spousal benefits related to Social Security income are widely misunderstood, and those that are not clear on the provisions might be disappointed by the values of the amounts they receive due to the misinformation they have listened to from their family, friends, and neighbors. In other words, knowing “part of the story” is not recommended when making such profound and potentially permanent income decisions. I’d clarify the spousal benefit feature of Social Security today.
Spousal benefits are the benefits to which an individual, either married or divorced, if meeting specific criteria, may be entitled to based on their current spouse’s or ex-spouse’s earnings record while that current spouse or ex-spouse is still living. To make a distinction here, benefits for individuals based upon a deceased spouse or ex-spouse are survivor benefits. I will be referring to spousal benefits for those with a living spouse or ex-spouse.
Let’s follow how spousal benefits work for married couple Kim and Jerry. (Criteria for divorced couples does vary, so watch for a future example for a divorced case). For simplicity, Kim and Jerry are both the same age and intend to claim their retirement income benefit (RIB) at their Full Retirement Age (FRA), which for them is age 66. Kim’s Primary Insurance Amount (PIA) is the retirement income benefit that she has earned at Full Retirement Age. In other words, Kim’s PIA is her RIB at FRA! In Kim’s case, her PIA is $2,400/month. Jerry’s PIA is $1,000/month.
Now, to know if Jerry, the spouse with the lower PIA is eligible for extra income, or a spousal benefit, we first need to calculate half of Kim’s PIA ($2,400/2), or $1,200. Now, if Jerry’s PIA is less than half of Kim’s PIA, he is entitled to a spousal benefit. We find that Jerry’s PIA is less than half of Kim’s PIA by $200 ($1,200 – 1,000). So, upon claiming benefits at their age of 66, Kim will receive $2,400/month, all based on her own earnings record and Jerry will receive $1,200 /month, $1,000 earned on his own record and the additional spousal benefit of $200 based on his wife, Kim’s earnings record.
Again, this example is for a married couple of the same age that claim their benefits at FRA. Spouses of different ages, making claiming decisions before or after they have reached FRA will change retirement income benefits, So, find a Certified Social Security Claiming Strategist to help you understand if and/or what your income benefits might be.
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