Claiming Social Security early can affect spousal benefits. here’s how

Married? You might want to think about how the early Social Security claim would affect your spousal benefits.

For starters, not all early filers can immediately access these benefits. And for those who can, that may not translate to a bigger monthly check. It is also common to misunderstand what you are entitled to as a spouse.

“A lot of people are confused about the spousal benefit,” said David Freitag, a social security expert and financial planning consultant at MassMutual.

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This is in part because the rules for spousal benefits for anyone born after January 1, 1954 were changed under the 2015 legislation.

“That’s when all the creative ranking disappeared for the [beneficiaries]Said Friday.

While it may seem complicated, two things to remember about spousal benefits in general are:

1. It is capped at 50% of the benefits your spouse would receive at full retirement age; and
2. You cannot get these benefits unless your husband or wife is already on Social Security.

It is also important to note that if your spouse dies, you will be claiming survivor benefits, not spousal benefits. (More on that later below.) And if you were born before the 1954 deadline, you might have other strategies available to you as a spouse.

You may be aware that your own Social Security benefits are reduced if you claim them before full retirement age, which is currently 66 or 67, depending on your year of birth. (Likewise, claiming anytime beyond that age means your benefits would be higher, increasing by 8% per year until you hit 70.)

About 69% of the 43.7 million retired workers in 2018 received reduced benefits because of their contribution before full retirement age, according to the Social Security Administration. The earliest you can apply for benefits is 62 years old.

However, your early declaration would also affect the spousal benefits to which you are entitled, Freitag said.

It doesn’t matter if your husband or wife applied early or waited until full retirement age (or later).

The amount of reduction is higher the earlier you apply.

For example, let’s say your spouse’s monthly benefit at full retirement age is $ 2,000, so 50% – the maximum you might be entitled to if you had to wait to file your return – is $ 1,000. .

If you decide to claim Social Security at 62, your spousal benefit would be $ 650, or 35% less, said certified financial planner Peggy Sherman, senior advisor at Briaud Financial Advisors in College Station, Texas.

Also, keep in mind that you won’t get both the benefit of your own record and the spousal benefit – you will get the greater of the two. Using the scenario above: If your monthly benefit at 62 was less than $ 650, you would get $ 650. If your benefits were higher, you will not get any spousal benefit.

You also don’t need to file an additional application to see if the spousal benefits would give you a monthly boost – you are also automatically deemed to apply as a spouse.

If you have no work record to qualify on, you can get spousal benefits with the same maximum of 50%.

Additionally, if your husband or wife claimed beyond full retirement age – meaning their benefits would have continued to increase – the 50% maximum is applied to the age amount. full pension, not the superior spousal benefit.

In the meantime, if your spouse is not already receiving benefits and you apply for yours early, you are not yet eligible for spousal benefits.

When your spouse files a return, you would be eligible for spousal benefits. However, since you deposited early, you would still not be entitled to the full 50%.

“The spousal benefits would be further reduced because you applied early,” Sherman said.

In other words, the only way to qualify for the full 50% Spouse’s Benefit at full retirement age is to wait until your own full retirement age – and that is. true even if your spouse made an advance declaration, Sherman said.

If you are divorced and the marriage lasted at least 10 years, you can claim on your ex-spouse’s record as long as you have not remarried. The same 50% maximum would apply – if that share is greater than your own benefits when you deposit, you will get the higher amount. (And no, it doesn’t impact your ex’s benefits at all.)

In the meantime, if your spouse dies, you would be entitled to survivor benefits, which are usually 100% of what your wife or husband received. If the amount is more than your monthly payments, you will get the higher amount.