The messy math of Social Security, partner benefits and when to claim – Community News
Social Security

The messy math of Social Security, partner benefits and when to claim

Life can be complicated – Social Security tries to make up for that.

The amount a person is entitled to when it comes to claiming Social Security goes beyond just what they earned during a lifetime of paid work.

This is especially true when it comes to married couples, as there is often a significant difference in the earnings data for the life of two married people.

This can happen because one or the other spouse takes time off (or works part-time) while the children are young and going to school. Or there may be a health condition that limits a spouse’s working years. In the case of self-employment, income can be piled more on one member of the couple than on the other.

Read: Will I still get Social Security benefits if my ex-wife dies?

Whatever the reason, as a couple approaches retirement age and revises their expected Social Security benefits, one member of the couple often has a much greater advantage than the other. When this happens, Social Security rules have a way of making up for foregone benefits from the lower-earning spouse, by adjusting available benefits based on the higher-earning spouse’s earnings. The maximum adjustment can bring the total benefits of the least-earning spouse up to 50% of the benefit of the higher-earning spouse.

Jeff and Laura, both nearly 62, review their expected benefits. Jeff has worked as an accountant throughout his career, and as such his full retirement benefit (or FRA, which is 67 for Jeff) is estimated to be $2,750 per month. Laura worked sporadically during her adult life as an administrative assistant at a private school, taking a number of years off while raising their three sons. Her expected benefit at FRA (also 67) is $900 per month. With the partner benefit adjustment, Laura’s total Social Security retirement benefit can be up to $1,375, 50% of Jeff’s FRA benefit. Her ultimate benefit is therefore a combination of her own benefit plus the partner alimony adjustment.

Read: You Can Claim Spouse Social Security Benefits Even If You’re Divorced – Here’s How

This calculation is often omitted when explaining the spousal maintenance provision and the total benefit for the least-earning spouse is referred to as 50% of the higher-earning spouse. It doesn’t always work this way, as there can be time differences between the submission dates.

If Jeff and Laura both wait until age 67 to claim their Social Security benefits, Jeff will receive the $2,750 projected for him, and Laura will receive her own $900 benefit, adjusted upward with the spousal benefit, up to a total from $1,375.

It’s important to understand that Social Security considers Laura’s total benefit to be a combination of her own benefit (based on her own earnings record) plus an upward adjustment based on Jeff’s earnings record. This is important if, in our example, Laura decides to introduce her own benefit at age 62, rather than delaying it until age 67. Jeff plans to delay the start of his Social Security benefits until age 67 so as not to reduce his benefits.

In this case, Laura would be eligible for her own benefit, which is reduced because she starts early. The discount is 30%, so her reduced benefit at age 62 would be $630 per month (instead of $900). Since Jeff has not yet applied for benefits, Laura is not yet eligible for spousal support. Once Jeff files a report, Laura will automatically qualify and be entitled to the raise.

The partner benefit will not become available to Laura until Jeff has applied for his Social Security benefits. So the timing of Jeff’s application determines when Laura is eligible for the partner allowance increase. If Jeff waits for FRA to apply, Laura will not be eligible for the partner benefit until then. If Jeff is delayed in filing an application to further increase his benefit after his FRA, he will have to weigh that increase against the foregone benefits to Laura, as she will not receive the partner allowance until Jeff files the application.

So let’s assume that Jeff starts his Social Security benefits at age 67. When he applies for his benefit, Laura’s partner benefit will be turned on, which will result in an increase in her total social benefit. The increase is calculated by taking the maximum possible partner benefit (50% of Jeff’s or $1,375) and subtracting Laura’s undiminished benefit ($900), for a result of $475. This adjustment amount (not reduced, because Laura joined FRA) is added to Laura’s reduced Social Security benefit ($630), for a new total monthly benefit of $1,105 for Laura.

This situation could become even more complicated if Jeff started his benefits early. If both Jeff and Laura receive benefits at age 62, Laura will be eligible for her own benefit and the partner adjustment at the same time, with both benefits reduced due to early filing. In this situation, Laura’s total benefit (her own plus spousal support) is reduced to the minimum, for a total benefit of $963. Jeff’s own benefit is also minimized, totaling $1,925 per month.

On the other hand, if Jeff postpones his benefits after FRA, Laura will not be entitled to the partner allowance increase until Jeff has submitted his application. At age 70, when his benefits are maximized, Jeff would be entitled to a monthly Social Security benefit of $3,410. While Jeff’s benefit increases as a result of the additional three-year delay, Laura’s partner allowance adjustment is set at a maximum of $475 (50% of Jeff’s FRA benefit minus Laura’s FRA benefit, or $1,375 – $900 = $ 475). There will be annual COLA increases where applicable, but the basic calculation always caps Laura’s partner allowance at $475.

In yet another example, if Jeff started Social Security benefits right away at age 62, but Laura defers benefits until her FRA, as previously calculated, Jeff would receive $1,925 per month, and once she reaches age 67 filing, Laura would receive the full $1,375 in benefits, because she deferred claiming benefits until full retirement age.

Finally, if the circumstances were different and Laura’s full benefit based on her own income were $1,500, she wouldn’t get a partner allowance at all. This is because her own unabridged benefit exceeds 50% of Jeff’s unabridged benefit.

To get information to view your potential benefits, go to SocialSecurity.gov and create your “mySocialSecurity” account there, if you haven’t already done so. In your mySocialSecurity account, you will find information about your future benefits, which you and your spouse can view together (your spouse will also need to access his or her account, for information specific to his or her benefits) to help you determine whether spousal support is in the works for either of you. If you don’t have access to a computer or are having trouble accessing your mySocialSecurity account, you can call SSA directly (1-800-772-1213) to discuss your situation.

Readers, do you have a question about Social Security? Email us at [email protected].