Calculating the Spousal Benefit

The Spousal Benefit is one of the more confusing aspects of the Social Security retirement benefit system.  It’s vaguely familiar that the spouse with the lower wage base is eligible for 50% of the higher wage base spouse’s benefit, or something like that…

How is the Spousal Benefit actually calculated?

Calculating the Spousal Benefit

Here’s how the Spousal Benefit is calculated:

First of all, the Spousal Benefit is based upon a differential – between 50% of the other spouse’s Primary Insurance Amount (PIA) and his or her own PIA.

So how does this work?  Let’s look at an example:

Let’s say there’s a couple, both the same age with a Full Retirement Age (FRA) of 66, and the wife has a substantially lower wage base than the husband.  At age 62, she files for the reduced benefit based on her own record, from a PIA of $800.  Her benefit is reduced to $600 due to filing early.

Later on, when they reach age 66, the husband’s PIA is $2,000 – and if he’s filed for benefits, she is now eligible for a Spousal Benefit.  The benefit is based on the differential between 50% of his PIA ($1,000) and her PIA ($800) – even though her benefit is reduced since she filed early.  The differential between those two factors is $200 ($1,000 minus $800), and this is then added to her reduced benefit for a total benefit of $800 (COLAs have been eliminated from this example to keep it simple).

Let’s adjust the example:  Same couple, only now the wife waits until FRA to begin drawing her own benefit, at the same time as the husband.  Now her Spousal Benefit will still be $200 (the differential between 50% of his PIA and her PIA), so her total benefit will now be $1,000 (her PIA of $800 plus $200 differential).

Now, what if the wife is younger?  As long as she’s at least age 62, she can begin receiving the Spousal Benefit once her husband applies for benefits.  It’s important to know though, that if she decides to file for the Spousal Benefit prior to her FRA, the Spousal Benefit factor is correspondingly reduced (as would be her own benefit if she filed early).  Instead of 50% of her husband’s PIA, at her age 62 the factor would be reduced to 35% of her husband’s PIA, and then the differential calculated as explained before.  At age 63 the factor would be 37.5%; at age 64, 41.7%; and at age 65 it would be 45.8%.  This reduction is calculated as 25/36ths of one percent for each month before her FRA up to 36 months, plus 5/12ths of one percent for each month more than 36 before FRA.  The reduction factor is then taken against the original 50% factor to determine the actual percentage of the husband’s PIA will be received.

And lastly, what if the wife has not filed for her own benefit?  Again, as long as she’s at least age 62 and her husband has applied, she can file for the Spousal Benefit based upon his PIA – and if she hasn’t filed, there is no differential between her PIA and his factor-applied PIA, so whatever factor (50% if she’s at FRA as well, as low as 35% if she’s at age 62 as explained above) is applied to his PIA and that will be her Spousal Benefit – until she files for her own benefit, at which time the calculation will be based on the differential between the two PIA’s (with whatever factor applies to his PIA).

Keep in mind that the examples above denoted the wife as the spouse to receive the Spousal Benefit – but the roles could be reversed, depending upon the circumstances.

I hope this clears things up a bit.  It’s a very confusing component to understand, but this should have helped to clear things up – let me know if you have any questions, as always!

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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22 Comments

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  • Thank you Jim this is very helpful. Glad to see the end number is what I had previously calculated although my approach was a bit of a shortcut. Seeing the calculation in its entirety is very useful.

    Thanks again,
    John

  • John –

    The calculation is as follows (note that the calculation is different from the one that I did for Linda above since in her case the benefits were being applied for less than 36 months before FRA, whereas in your case the benefits are being applied for more than 36 months before FRA):

    #1) Subtract the unreduced retirement PIA from the unreduced spouse benefit ($1,183 – $431 = $752)

    #2) Determine spousal benefit reduction factor – # of months before FRA greater than 36 (48 – 36 = 12), subtracted from 180 (180 – 12 = 168) and divided by 240 (168 / 240 = 0.7000)

    #3) Determine spousal benefit addition – factor from #2 times the factor from #1 – $752 * .7000 = $526.40

    #4) Determine reduced retirement benefit – (at age 62 the reduction is 25%) times PIA ($431 * 25% = $107.75); subtract that amount from PIA ($431 – $107.75 = $323.25)

    #5) Add the figure from #3 and #4 together – $526.40 + $323.25 = $849.65 – This is your wife’s total monthly benefit amount.

    Hope this helps –

    jb

  • I’ve read a couple of different things regarding my scenario and I’d like to get something definitive as I plan for my retirement next year and hoping you can help me clear things up.

    My wife will be turning 62 and I will be turning 68 and retiring.

    My PIA at 66 was $2,366 and my benefit when I retire at 68 will be $2,770

    My wife’s PIA at 66 is $431.

    Can you show me the calculation to determine what she will receive for her own + spousal benefit at 62? I’ve calculated about $850 but I’ve read some other conflicting scenarios.

  • Jim,

    That was a tremendous help!

    You are providing a wonderful service to people who need a little help understanding the confusing Social Security system.

    Thank you so much!

    Linda

  • Linda,

    The calculation is as follows:

    #1) Subtract the unreduced retirement PIA from the unreduced spouse benefit ($1,200 – $500 = $700)

    #2) Determine spousal benefit reduction factor – # of months before FRA (30), subtracted from 144 (114) and divided by 144 (114 / 144 = 0.7917)

    #3) Determine spousal benefit addition – factor from #2 times the factor from #1 – $700 * .7917 = $554.19

    #4) Determine reduced retirement benefit – # of months before FRA times 5/9% (30 * 5/9% = 16.67%) times PIA ($500 * 16.67% = $83.35); subtract that amount from PIA ($500 – 83.35 = $416.65)

    #5) Add the figure from #3 and #4 together – $554.19 + $416.65 = $970.84 – This is your total benefit amount.

    If you wait to file at FRA, you would be in line for a spousal benefit of 50% of your husband’s PIA.

    Hope this helps –

    jb

  • If my spouse age 64 with a PIA of $2400 and I age 63 + 6 months with a PIA of $500 apply for benefits at the same time what will I get for a total benefit?

    Am I correct in assuming it will be $2400 x .396 = $950 minus my PIA of $500 = $450 plus my reduced benefit of $500 x .828 = $414 for a total benefit of $864 ($450 + $414)?
    Is there any way I can just apply for spousal benefits at the time my husband applys and get the .392 of his PIA of $2400 for a benefit of $950? It seems there is a penalty of about $86 because I worked.

    If I wait till my FRA of 66 will I get the 50% of $2400?

  • Jen,

    While there may be some back-benefit available, six months is usually all the farther back you’ll see. On the other hand, the later your mother-in-law waits, up to Full Retirement Age, the more Spousal Benefit that she will receive. When applying for the Spousal Benefit before Full Retirement Age, the Spousal Benefit is discounted from the 50% figure, so delaying is in her favor in terms of the size of the benefit available.

    Hope this helps –

    jb

  • Jim,

    I haven”t been able to find an answer for my question and hope you can help:

    My in-laws are the same age (my mother-in-law is three months younger), my father-in-law the larger earner (therefore, higher benefits). Both applied for and started receiving their SS benefit at 62. We have just discovered that they applied for my mother-in-law’s benefit based only upon ONLY her earnings and not taking into account his benefit.

    They are meeting with the local SS officer this week to update her benefit to reflect the difference between her benefit and the 50% of his.

    However, based upon this information, my mother-in-law has not been paid for the entitled benefit difference since the age of 62. Is she eligible to appeal or request back payments of this entitled benefit (the difference b/w her benefit and the 50% of her husband’s), and if so, how do they go about doing this?

    Thank so much,
    Jen

  • John –

    For your three questions:

    1 – Yes, this is how it will work for you, and it appears that this would be the better overall benefit for you and your wife.

    2 – Yes, if you file at or after FRA for the Spousal Benefit only, you will earn delayed retirement credits (DRCs) up to age 70.

    3 – Yes, when you file for your benefit at age 70, your wife will be eligible for the Spousal Benefit as you have calculated.

    Spot on!

    Hope this helps –

    jb

  • None of the examples I have been able to find apply to what is probably a common situation: the younger spouse is the higher earner.

    In our case, my wife is approaching 66, her FRA. She will file and collect her own benefit at that time. Her expected PIA is 1028 per month (using 2011 dollars). I am four years younger, and my FRA is also 66, but I plan to wait until age 70 to begin collecting my benefit. My projected PIA is 2359, so my projected benefit at age 70 is about 3114 (again, all figures are plus COLA).

    If when I reach 66 if I “file and suspend benefits,” my wife, as I understand it, will become eligible for a spousal benefit of (2359×1/2)-1028 = 151.50, while I continue to earn credit for suspending my benefits.

    Three questions:
    1) If, instead of “file and suspend at 66”, I “apply for spousal benefits for myself on her account at my age 66”, but do not file for my own benefit until age 70, do I qualify for a spousal benefit of 1028*1/2 = 514 from age 66 thru age 69?
    2) In this case, do I still earn full credit for delay in filing @ age 70+?
    3)I understand that if I do not file for my own benefit until age 70, my wife will not qualilfy for a spousal benefit during the years I am 66 thru 69. But after I file and claim my own benefit at 70, would she then become eligible for the spousal amount on my account as calculated above (151.50 plus COLA)?

  • Neil,
    Let me see if I have this right. You said that my spouse’s benefit is based on my PIA, not my benefit. So, if my PIA is $1900 and I retire at 63, my benefit will be about $1520 (80% of PIA). Looking at the social security chart, my wife’s benefit will be reduced to 37.5%. So, as I understand it, her amount would be 37.5% of $1900 not 37.5% of $1520.

  • Hi, Neil –

    Unfortunately, the game is over for your relatives. There is no longer a way to “undo” the early filing, as of the revision to the Social Security Administration’s withdrawal policy on December 8, 2010.

    I know this didn’t help (and unfortunately this happens all too often in this line of work!) but at least you may better understand the situation now.

    Take care,

    jb

  • Wow Jim. Nice page to visit.

    Relatives of mine, husband and wife, both retired at 62 and have similar PIAs. One is at and the other is reaching FRA. Is there any crack in their inadequate benefit floor for either of them to suspend AND get spousal benefits while resetting one of their effective retirement ages a bit? — or is that game over because they both have already applied years ago and are too similar in benefit levels? They cannot realistically suspend at all if there is not something to help them along the way.

    I wish I was in your line of work. I so like helping people.

    Neil

  • Michael –

    There is no credit applied to the Spousal Benefit after FRA, other than annual COLAs. In other words, your wife’s Spousal Benefit is always going to be factored against your PIA at FRA (with COLAs applied).

    jb

  • Great website! Thanks for all the wonderful information!!

    PIA is calculated based upon FRA(67). What if I delay taking benefits till 70. Does my PIA increase as it relates to calculating spousal benefits? My wife is 8 years younger.

  • David –

    I don’t know the answer to your question. I’d suggest that you (or your folks) follow up with the local SSA and if they don’t get any satisfaction request an appeal to the calculations. SSA is supposed to make sure that its beneficiaries understand the calculations of benefits – and in the case you’ve described the calculations aren’t adding up correctly, so something must be impacting it. They need to explain why.

    Good luck – let me know how it turns out!

    jb

  • Jim,

    Thanks for sharing your expertise with others.
    In reviewing my parents retirement benefits, I’ve encountered a discrepency I can’t seem to explain. My father filed at FRA in 1996 at age 67 as the Primary. My mother also filed for Spousal Benefits at the same time and is the same age. Her gross benefits have run between 46.2% and 47.5% of my father’s benefits. He has continued to work and did have some upward revisions of his AIME which increased his PIA, but my mother’s spousal benefit did not increase by the same percentage so that it would be 50% of his? He went to the local SSA branch to inquire but was advised that both amounts were correct but did not cite a reason for her benefit being less than 50% of his. What am I missing? How can we get it corrected?
    Thanks!

  • Hi, Jean –

    The Spousal Benefit is based upon the PIA of the other spouse, not the benefit. So in your case, if your husband waits until his FRA, he will be eligible for a benefit of approximately 50% of your PIA, or $612.50 (adjusted for COLA, of course).

    The reason for this is because the law is laid out to treat the decisions of each spouse separately from one another – so that, for example, in the case of a divorce the ex-spouse cannot make a benefit decision that will impact the other’s benefit amounts.

    Hope this helps!

    jb

  • Hello,

    Could you share some insights with me?

    I am 62 and currently drawing $919 on social security. My PIA is approximately $1225, but was reduced by 25% since I started drawing my benefits early. My husband will be 66 in November 2011, which is his FRA. He would like to take a spousal benefit when he is at his FRA and allow his social security to grow until he reaches age 70.

    My question: Is his spousal benefit based on the $919 I am currently getting, or will it be based on my PIA of $1225?

    Thank you for helping us navigate these “waters”!

  • Hi, Rebecca –

    Your Spousal Benefit will be based upon your husband’s PIA, not his benefit. So the supervisor at SSA was correct (there’s always a first time!) when you were told that your benefit would be $210/month if you wait to Full Retirement Age.

    Hope this helps –

    jb

  • Hello,
    I spoke with a supervisor at Social Security by phone yesterday to determine when it would be best for me to file for my own and wife’ benefits.
    I am 62 and my PIA is 142. My current reduced amount is $113. My husband’s PIA is $421 and he took retirement at age 62, so he gets $307 a month, part of which goes to pay for his medicare. The supervisor assured me that if I waited until my full retirement age of 66 I would get $$210/month. I would love this to be true, but everything I have read online says I would get only 50% of his benefits amount or $153. I guess it won’t make much difference as the amount is low, but I still want to make the best decision given our limited resources.
    Thank you.
    Rebecca

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