Dear Larry:
Two questions: I'm still working at 66 and don't yet draw SS benefits, and my wife is also 66 but began her benefits at age 62. Question: When I finally retire and file for my benefits at 68 (my target) and my wife files for spousal support, is it true because she began at 62 that she's only entitled to “receive” 35% of what would be the normal 50% spousal value based on my benefit amount? Or, is that 50% amount “reduced” by 35%? Both conditions offer very different math outcomes, but I'm getting conflicting info from SSA and other online articles.
Second Question: For one filing after full retirement age, is the 8 percent annual growth pro-rated by the month at the time of filing, or must one wait for the next birthday to see any growth in the rate? Example: Filing at age 67-1/2 (pro-rated increase by six months over age 67).

Thank you,

George

Hi George,

Before answering your questions, it sounds like you would qualify for spousal benefits now. If your wife is already drawing her retirement benefits, you can file a restricted application for spousal benefits only starting at age 66 without being deemed to have filed on your own record. So, the spousal benefits are simply a bonus, and will have no adverse affect on your own benefits when you subsequently file for them.

I'll answer your first question with an example. John's full retirement age benefit rate (PIA) is $2000. His wife Jane's PIA is $800, but she starts taking her benefits at age 62 and receives a reduced rate of $600. John waits until age 68 to start his benefits, increasing his monthly rate to $2320 (i.e. $2000 x 1.16). Jane's spousal benefit is calculated by taking 50% of John's PIA and subtracting Jane's own PIA, leaving an excess of $200 (i.e. $2000/2 - $800). Since Jane is already full retirement age when she becomes eligible for spousal benefits, her excess spousal benefit is not reduced. So, the $200 excess spousal benefit is added to Jane's $600 reduced retirement benefit, giving her a combined benefit rate of $800.

Delayed retirement credits (DRC) are accrued on a monthly basis (i.e. 2/3rds of 1% per month) for each month that a person defers taking their Social Security retirement benefits from their full retirement age (FRA) until age 70. So, if you started taking your benefits at age 67 & 1/2, you would receive 12% of delayed retirement credits (i.e. 18 months x 2/3rds of 1%). However, when a person starts drawing benefits between FRA and age 70, DRCs are initially credited only through December of the year prior their year of filing. The partial year DRCs are then added effective with the following January.

For example, say that a person turned age 66 in January 2016, and files for retirement benefits effective with July 2017. They would initially receive only the 8% of DRCs accrued through December 2016. The remaining 4% of DRCs for the months January through June of 2017 would then be added effective with January 2018. From then on, their rate would include the full 12% of DRCs that they had accrued up to their month of entitlement.

You may want to strongly consider running the maximization software available on this website. It sounds like you would probably want to file for spousal benefits now and then switch to your own record at age 70, but the software will tell you for sure.

Best, Jerry