Q & A
How is the spousal benefit reduction calculated?
Complete Question: I know the major advice is to take your Social Security at age 70, but my husband and I just can’t afford to do that. So we’re just trying to think of the best way to get our benefits with minimal impact. When we look at the spousal calculation, though, we’re a little confused. We were told I should get 50% of his benefit, but some of my friends have told me they get less than 50%. I asked them if they were impacted by earnings or something, and they said no. So what am I misunderstanding? What exactly would I be getting 50% of? His current benefit? Future benefit? If it helps, I’m 64 and he’s 65. According to the Social Security office, his full retirement benefit is $1,900, but will be reduced to $1,773 because of him taking it one year early. So I’m assuming I should get $886.50, right?
Answer: I think I see where there is a misunderstanding. You are correct that spouses are supposed to get 50%. However, that 50% is based on the other spouse’s full retirement benefit, which in your case is your husband’s full retirement benefit of $1,900. This makes your maximum spousal benefit $950/month. It’s a maximum because you would only get that $950 if you waited until you are full retirement age to start collecting it (the age your husband starts collecting his benefit does not affect your spousal benefit). Therefore, if you take the spousal benefit at age 64, you will incur your own benefit reduction on top of the 50% for applying two years early, which would reduce your spousal benefit from $950/month to $792/month. This is probably why your friends are also getting less than 50% – they might have taken the spousal benefit younger than full retirement age.