If my spouse elects to collect Social Security at 62 on her own work record but continues to work creating a holdback from SS payments over $19k earnings, and then when I retire at 67, she collects 50% of my SS payments (she will be 68 at that time). I understand that normally her early retirement penalty will be adjusted by the amount of months held back by SS, how will her monthly payment be adjusted to recover the held back payments if her monthly payments and my spousal top off payment cant exceed 50% of my SS monthly payment? Will her payment increase and my top off remain the same of will the recovery of held back payments be lost forever as she will be receiving 50% of my monthly payment as a spouse at that time? Is taking her payments at 62 and continuing to work the best way to go? Ultimately, my income far exceeds my wife's, and long term, we are best served by taking my SS at 67 or 70 and also taking my wife's spousal benefit at that time as well. Thanks,

Hi. It sounds like you may be misunderstanding how spousal benefits work. If a person is already drawing their own benefits when they first become eligible for spousal benefits, they can't stop getting their own benefits and switch to drawing spousal benefits. Even if the person subsequently qualifies for additional spousal benefits after starting their own benefits, any reduction for age applicable to their own benefit rate would continue for as long as both they and their spouse are living.

For example, say Mary files for her Social Security retirement benefits at age 62. Mary's primary insurance amount (PIA) is $800, but Mary's benefit rate is reduced for age to $570. Five years later, Mary's husband applies for his benefits. Mary's husband's PIA is $2000. Mary's unreduced excess spousal benefit would then be calculated by subtracting her PIA from 50% of her husband's PIA, which in Mary's case amounts to $200 (i.e. $2000/2 - $800). SInce Mary is full retirement age (FRA) when she becomes eligible for the spousal benefit, her excess spousal rate is not reduced for age. However, the reduction for age applied to her own benefit rate would continue. Thus, Mary would be paid her full excess spousal amount of $200 in addition to her own reduced rate of $570 to give her a combined rate of $770.

In the example above, if some of Mary's retirement benefits were withheld between age 62 and FRA due to her earnings, the reduction for age applied to her own rate would be adjusted when she reaches FRA to credit her for any months that her benefits were withheld. However, unless all of Mary's benefits between age 62 & FRA are withheld, some reduction for age would continue to apply and her combined retirement and spousal benefit rate would still be less than 50% of her husband's PIA.

It sounds like you and your wife may want to strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits.

Best, Jerry