How Much is the Social Security Spousal Benefit? - dummies

How Much is the Social Security Spousal Benefit?

By Jonathan Peterson

Copyright © 2018 by AARP. All rights reserved.

The maximum spousal benefit is 50 percent of the breadwinner’s full retirement benefit. The actual amount of the spousal benefit depends on the size of the breadwinner’s full retirement benefit and the age at which the spouse chooses to claim it. Suppose the breadwinner’s full monthly retirement benefit is $1,000. The spousal benefit in this example can go up to $500, if the spouse claims it at full retirement age (currently 66). If the spouse has no dependent child, he or she may claim a spousal benefit at age 62.

The spousal benefit is permanently reduced, however, for each month the spouse claims it before reaching full retirement age. If a spouse is still caring for the couple’s child who is younger than 16 or disabled, the age limit doesn’t apply. In that case, a spouse may qualify for a full spousal benefit (50 percent of the breadwinner’s full retirement amount) at any age, as long as the breadwinner has filed for Social Security.

Violating the child-in-care rules can cost you money. If you qualify for a spousal benefit because you’re caring for a child, the SSA expects you to be doing just that. You’re supposed to inform the SSA if the child spends more than a month not in your care, typically in the care of a nonresident parent. Payments are withheld — or you’ll have to return them — for the number of months in which the child wasn’t in your care. Note the important exceptions: If the child is with you for even one day during the month, that month counts as in your care. Also, a child is considered to still be in your care if he or she has gone to camp, is on vacation, or attends boarding school. You don’t have to inform the SSA of such events.

When a child isn’t in the picture, the reduction factors for early claiming can significantly reduce the spousal benefit. For example, a spouse whose full retirement age is 66 gets 50 percent of his or her partner’s full retirement benefit at that age. If he or she receives benefits sooner, however, the reductions are made as follows:

Age at Which Benefits Are Claimed Spousal Benefit
65 45.8%
64 41.7%
63 37.5%
62 35%

The spousal reduction may vary depending on your date of birth and full retirement age. To get a calculation based on your own age of claiming, go to SSA Quick Calculator.

If you claim a spousal benefit before full retirement age, it’s reduced by 25/36 of 1 percent for each month, up to 36 months. If you claim the benefit more than 36 months before full retirement age, the benefit is reduced by 5/12 of 1 percent for each additional month.

Although a spousal benefit is reduced for claiming it before full retirement age, you get no reward for delaying it after you reach full retirement age. This is a notable difference from the Social Security retirement benefit, which goes up in value if you don’t claim it until you reach 70. The maximum spousal benefit is 50 percent of the breadwinner’s full retirement benefit.

You can get a rough idea of the spousal benefit you may qualify for by checking out the online calculator. It won’t give you a dollar figure, but it will estimate the spousal benefit as a percentage of your marital partner’s full retirement benefit, called the primary insurance amount (PIA). The percentage you see is based on your date of birth and when you expect to claim the spousal benefit.

If you’re a spouse who wants to claim spousal benefits, be aware of the reductions for claiming benefits prior to your full retirement age. They make a difference, and the difference adds up over time. Here’s an example of this situation in action:

Melissa, who recently turned 62, is pleased to find out that she qualifies for a Social Security spousal benefit when her husband, Todd, begins to collect retirement benefits. Todd will begin to collect $1,800 — his full retirement benefit — shortly after he turns 66 next month. Melissa’s spousal benefit is based on Todd’s full amount, but the size of her payment depends on the age when she begins to collect. Four years from now, when she reaches her full retirement age of 66, Melissa will qualify for half of the $1,800 — $900 per month. But she isn’t happy to find out about the reductions in store if she takes it sooner. If Melissa claims the spousal benefit right away, it’s reduced to about 35 percent of $1,800, or $630 per month. If she waits until she’s 63, the benefit goes up to about $675. If she waits until she’s 64, it goes up to about $750. If she waits until she’s 65, the benefit is about $824.

Melissa and Todd both enjoy good health and are hoping for many years left with each other and the rest of their family. But with their modest life savings and in an era of low interest rates, they have little retirement income to fall back on, other than Social Security. Melissa and Todd talk it out over dinner. They decide it makes sense for Melissa to postpone her claim for a while. Instead, she’ll continue working part-time at the prep school and putting away a bit of money each month. When she turns 66, she’ll collect a spousal benefit of $900 per month.

Did Todd and Melissa make the right decision? Of course, that’s something only they can decide. But they did not maximize their benefits, at least if they live to their average life expectancies. Melissa got the maximum spousal benefit by waiting until she reached full retirement age. But if he had waited until 70, Todd could have gotten 32 percent more — and enhanced the survivor benefit he may one day leave to Melissa.

Early collection of spousal benefits may be costly for another reason, unrelated to the reduction for age: If you’ve earned Social Security retirement benefits based on your own earnings and you begin collecting a spousal benefit before you reach your full retirement age, your own (unclaimed) retirement benefit no longer can increase, as it otherwise would for every month you delay claiming after the full retirement age (and up until age 70). This could cost you thousands of dollars — possibly many thousands — and should be a factor in your decision of when to begin collecting spousal benefits.

If you turned 62 before January 2, 2016, and have reached full retirement age without claiming benefits, you may still have the option of collecting a spousal benefit but holding off a claim on the retirement benefit you earned while working. You just have to make clear to the SSA that you’re applying for spousal — not retirement — benefits. By doing so, your unclaimed retirement benefit may continue to increase in size. Potentially, divorced spouses who turned 62 before January 2, 2016, who also meet the criteria may also pursue this strategy.