September 25, 2013

MinistryCPA Special Topic: Social Security Spousal Benefits

Question:

I feel that I have a good grasp on the details of my retirement benefits and have reached full retirement age (FRA), but my wife and I have decided that I should wait to retire until age 70 in order to receive delayed retirement credits (DRC). However, my wife would like to begin receiving monthly benefits. I have heard the term "spousal benefit" in the past, but am not sure how that works. Can my wife collect some sort of benefits on my record?

Answer:

Short answer: yes!

Under the rules of Social Security, the spouse of a worker who delays retirement until age 70 in order to receive DRCs (increased retirement benefits after one has reached FRA) can collect benefits on the working spouse's record. This will not affect the amount of benefits that the working spouse can collect once he or she elects to begin receiving benefits. A non-working or low-wage spouse should consider choosing the spousal benefit.

In order to accomplish this, the working spouse who posed the question here, once reaching FRA, must file and suspend his or her benefits; the other spouse can then file for spousal benefits. The spousal benefit will equal one-half of the working spouse's benefit at FRA, reduced by any applicable penalty for initiating benefits prior to the non-working spouse's FRA (more on FRA and when to file: When Can I Start Receiving Social Security Benefits?).

As is the case with our other posts on the topic of Social Security, you should consult your financial advisor to determine the best course of action for you and your spouse. Individuals who are disabled or eligible for survivor's benefits may be subject to different guidelines.

Source: Retirement Planner: Benefits For Your Spouse

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