Inquiring about the potential impact of an early Social Security claim on a partner's spousal benefit?
In the world of retirement planning, understanding Social Security benefits is crucial, especially when it comes to spousal benefits. Here's a breakdown of how spousal benefits work and what factors affect them.
Firstly, it's important to note that the claiming age of a Social Security beneficiary does not impact the size of the spousal benefit their partner is eligible for. The spousal benefit is calculated as up to 50% of the worker's full retirement age (FRA) benefit amount, regardless of when the worker actually claims their own benefits.
However, the age at which the spouse claims their spousal benefit does matter. If the spouse claims before their own full retirement age, their spousal benefit is reduced permanently. For instance, if the spouse claims at age 62, the benefit can be reduced by up to about 30-35% compared to claiming at full retirement age.
The spousal benefit amount is based on the worker's FRA benefit, not the amount the worker receives if claimed early or delayed. On the other hand, the worker's claiming age affects only their own benefit amount, not what the spouse receives as a spousal benefit.
Coordinating your claiming strategy with your spouse can help take home the largest household benefits. Applicants for spousal benefits must wait until the primary applicant (qualifying worker) applies for Social Security.
To qualify for a spousal benefit, the spouse must be at least 62 years old and married at least one year. Delaying the spouse's claim until full retirement age maximizes the spousal benefit amount. Delayed retirement credits apply only to an individual's own benefit, not to the spousal benefit.
If the spouse claims immediately at 62, they would only get $650 per check if their FRA is 67, for example. On the other hand, if the retired worker qualifies for a $2,000 monthly benefit at their FRA, their partner's maximum spousal benefit is $1,000 at their own FRA.
Remember, the government pays the partner their own retirement benefit if it's larger than their spousal benefit, and they cannot claim both benefits at once. Both partners can set up their own my Social Security accounts to estimate benefits at every possible claiming age.
Claiming retirement benefits early can shrink the checks up to 30%, and claiming the spousal benefit early can reduce it permanently. The spouse's claiming age matters: claiming early can reduce their checks by 25/36 of 1% per month for up to 36 months, and then by 5/12 of 1% per month thereafter.
Some people delay Social Security or avoid claiming altogether if they believe their spouse will be heavily dependent upon Social Security. The lower-earning spouse can claim their own retirement benefit early to allow the higher-earning spouse to delay benefits until their FRA or later.
In summary, the spousal benefit depends on the worker's FRA benefit amount and the spouse's own claiming age, but not on when the worker claims benefits. When you sign up for Social Security is a personal decision, best discussed with your spouse. The lower earner can switch to a spousal benefit if it's worth more than what they're currently receiving once the higher earner applies for benefits.
Lastly, it's essential to remember that benefit checks grow for every month the primary applicant delays benefits until they turn 70. Benefit estimates can be found through your my Social Security account.
Personal finance plays a significant role in retirement planning, and understanding Social Security benefits is especially important when considering spousal benefits. For instance, the spousal benefit is calculated as up to 50% of the worker's full retirement age (FRA) benefit amount, and the age at which the spouse claims their spousal benefit does matter – claiming early can reduce the benefit permanently.
