I started to receive my soc sec benefits at age 63. I am now 66. Due to recent changes in our financial planning, I am considering 'suspending' my current benefits-planning on restarting them when I am 68 when my spouse will begin taking soc sec and I can take Spousal benefits, which will be higher than my benefit. I am doing this to increase the amount of Delayed Retirement Credit. However, I am confused from the your book??
1) Because I started receiving benefits earlier than my FTA, will my Spousal Benefits (at age 68) be less than 50% of my spouses who has never received any of his benefits?
2) If so, will the Spousal Benefits be increased by whatever Delayed Retirement Credit I accumulate between now and age 68?
Thank you

Hi,

First off, you can't do what you propose in your opening paragraph. You could suspend your benefits in order to accrue delayed retirement credits (DRC), but you couldn't be paid spousal benefits while your own benefits are in suspense (https://www.ssa.gov/planners/retire/suspendfaq.html).

If and when you do file for spousal benefits, your spousal benefit rate will be calculated by subtracting your own full retirement age rate (PIA) from 50% of your spouse's PIA, regardless of whether or not your own benefits are in suspense. However, that difference if positive would then be reduced by the amount of any DRCs that you may have earned on your own record.

For example, say Jane has a PIA of $800 but starts drawing her retirement benefits at age 63 at a reduced rate of $640. Then at age 66 Jane suspends her benefits in order to accrue DRCs. When Jane is age 68 her husband files for his retirement benefits with a PIA of $2000. Jane's spousal benefit amount would be calculated starting with 50% of her husband's PIA and then subtracting her own PIA, or a difference of $200 (i.e. $2000/2 - $800). Jane's excess spousal rate would not be reduced for age because she was already over full retirement age when she became entitled to the spousal benefits.

If Jane in the above example hadn't suspended her benefits at age 66, her spousal rate of $200 would be added to her reduced retirement rate of $640, giving her a combined benefit rate of $840. However, Jane's own benefit rate would have increased by 16% due to the DRCs Jane earned from age 66 to 68, raising her retirement benefit rate to $742. That increase of $102 would then be subtracted from Jane's excess spousal rate of $200, reducing the net amount to $98. Thus, Jane's combined benefit rate would still be $840 and she would have gained nothing from suspending her benefits for 2 years. Furthermore, due to the 2015 amendments passed by Congress, Jane couldn't be paid even the excess spousal benefits while her own benefits are suspended.

The bottom line is that you would likely only benefit from suspending your benefits if your age 70 rate would be significantly higher than the potential combined rate that you could receive from your own record plus any excess spousal benefits for which you may qualify. You and your spouse may want to strongly consider using the maximization software available on this website in order to determine your best overall strategy going forward.

Best, Jerry