Dear Rusty: We are a little confused about husband and wife Social Security benefits. I am 63 years old (born 1955) and still employed full-time. My wife turns 60 this month. She is retired military and has been working in the civilian sector for a number of years now. She has always earned more than me. We are confused as to how Social Security payments between us will work. I know I will start to collect before she does. Can you help with an explanation? Signed: Confused
Dear Confused: Social Security benefits for married couples can, indeed, be confusing, especially if you both still work. If your wife has always been the higher-earner, you could possibly be entitled to a spousal benefit from her record, but only if your own benefit amount at your full retirement age (FRA) is less than 50% of your wife’s benefit amount at her FRA.
Since you say you will claim Social Security before your higher-earning wife, any spousal benefit you may be entitled to will not take effect until your wife starts her benefits. To be clear, a spousal benefit is only due if that amount is more than you are entitled to on your own work record; otherwise you only get your own benefit. If a spousal benefit is due, what essentially happens is that you get your own Social Security benefit plus a “spousal boost” to bring you up to what you are entitled to as a spouse. The spousal benefit can be 50% of the higher earner’s FRA benefit amount (if that is more than your own) but you only get the full 50% if it starts at your full retirement age; otherwise it is less than 50%. That’s because any time any Social Security benefit is taken earlier than your FRA it is actuarially reduced according to the number of months before your FRA that it is taken.
If you (or your wife) collect Social Security before you have reached your full retirement age and you continue to work, you will be subject to an annual earnings limit ($17,640 for 2019) which, if exceeded, will cause SS to withhold benefits equal to $1 for every $2 you are over the limit. Since they don’t withhold partial benefits, that could mean some months without benefits. That is true up to the year you reach your full retirement age when the earnings limit goes up by more than 2.5 times and the penalty is less ($1 for every $3 over the limit). Then, once you reach your full retirement age, there is no longer a limit to how much you can earn while collecting benefits. And for clarity, if you have benefits withheld because you exceed the earnings limit, you’ll get time credit for those months when you reach your full retirement age, which will somewhat increase your benefit amount at your FRA. So, your plans for working and earning should be considered in deciding when both of you should claim your SS benefits.
To summarize, if you have both earned at least 40 SS credits, you are both entitled to your own Social Security benefit. If half of your wife’s SS benefit at her full retirement age is more than your own benefit at your full retirement age, you’ll also get a spousal boost equal to the difference. But if either of you claim benefits early they will be reduced, and if your spousal benefit starts before your FRA it will also be reduced. And don’t forget, working before you reach your full retirement age will subject you to Social Security’s annual earnings limit.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at firstname.lastname@example.org.