At 62, will my spouse’s partner profit be half my retirement profit?

Ask Larry

Economic Security Planning, Inc.

Today’s column addresses questions about the amount of spousal allowance when both spouses submit at 62 to receive retrospective retirement benefits before major spouse benefits and when spouse benefits may be available with divorced spouses. Larry Kotlikoff is Professor of Economics at Boston University and the Founder and President of Economic Security Planning, Inc, which market Maximize My Social Security and MaxiFi Planner.

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Would my wife’s spouse benefit at 62 be 50% of my social security pension?

Hey Larry, my wife and I were fortunate enough to retire early last year. We both earned enough credits to be eligible for social security benefits. If my wife starts drawing her retirement pension later in 2021 at the age of 62, would she be entitled to collect the difference between her monthly retirement pension and 50% of the retirement pension I will receive by 2022? My benefit at 62 is roughly three times what my wife would receive. Thanks, Evan

Hi Evan, that’s not quite it. If your wife is claiming her pension benefits, she will be considered to be claiming both her social security pension and her spouse’s benefits. However, you can only receive the spouse’s benefit when you are drawing your old-age pension. If you apply for your retirement pension after your wife has applied for her benefits, she might not be able to switch from her own benefits to a spouse’s pension, but she could apply for an excess spouse’s pension.

Your unreduced spouse’s pension would be 50% of your primary insurance amount (PIA), which is your retirement pension amount (FRA) minus 100% of your PIA. However, if she receives her spouse’s allowance before her FRA, it will be reduced below that amount. Her retirement pension has also been reduced because of an early application and that reduction remains in effect even after she applies for her reduced spouse’s pension.

One thing to keep in mind is that if you die before your wife, her maximum survivor rate is the higher of your Benefit Rate, or 82.5% of your PIA.

So if you claim your benefits at the age of 62, you are reducing not only your monthly benefit rate, but also the survivor’s rate that your wife could possibly receive. You and your wife may want to use my company’s software – Maximize My Social Security or MaxiFi Planner – to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits. Social security calculators provided by other companies or non-profit organizations can provide suitable suggestions if they have been prepared with the utmost care. Best of all, Larry

Do I understand the spouse’s allowance correctly?

Hello Larry, do I understand spouse benefits correctly? There is so much conflicting information out there.

My husband and I are both 67 years old and will have reached full retirement age in 2020. He is the higher earner and will postpone applying for social security until 70. I am entitled to a spouse’s pension of $ 1,505.50. This will break down into my own $ 1,000 retirement pension and an excess spouse’s pension of $ 505.50.

If I claim my own retirement pension now, I will get $ 1,000, but the excess spouse’s pension would be deferred until my husband started his benefits in three years, right? Will it be added automatically or do I have to submit it?

Are there any pitfalls that I am overlooking? Thanks, Robyn

Hi Robyn, yes, you seem to have understood the spouse’s pension correctly, but if you haven’t applied for your retirement pension it sounds like you want to do so right away.

Any spouse benefits that you may receive are calculated by deducting the higher amount from your primary insurance amount (PIA) or your PIA, which is increased by late pension credits (DRC), from 50% of your husband’s PIA. A person’s PIA is their social security pension rate if they are using their benefits at full retirement age (FRA).

So if half your husband’s PIA is more than your own records indicate, even if you waited until 70 to start drawing, then ideally you want to withdraw by your full retirement age (FRA) at the latest Start your own accomplishments.

You can claim your own benefits up to six months retrospectively, and based on the information in your question, you can claim your benefits now and claim the full six months retrospectively. You must also make a separate application for spouse’s benefit if your husband applies for his old-age pension. Best of all, Larry

Can my mother still apply for a divorce pension?

Hello Larry, my mother retired and moved here to GA when she was 66. She was married for 30 years but divorced. Is she entitled to a spouse’s allowance? He lives in Indiana. Thank you, Frank

Hi Frank, The states your mother and ex-spouse live in would not be an issue, but whether or not they are eligible for divorced spouse benefits likely depends on the relative levels of benefit rates she and her ex have.

If your mother’s ex is still alive and your mother is already claiming pension benefits, she can only be entitled to divorced spouse benefits if her primary insurance sum (PIA) is less than 50% of the PIA of her ex. A person’s PIA is their social security pension rate if they are using their benefits at full retirement age (FRA).

She might also be eligible for survivor benefits if her ex’s benefit rate or his PIA is higher than your mother’s PIA. In any case, it would certainly not hurt your mother to check with Social Security to see if she is entitled to benefits based on her ex’s file. Best of all, Larry

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