How to Calculate the Social Security Spousal Benefit

How is the Spousal Benefit calculated?  I’ve covered this topic in several prior posts, but thought I’d give it another shot, to hopefully close this chapter for now.  I’ve heard conflicting answers from various corners of the SSA world – both personally and from reader communications.  Too often there is a pat answer that the Spousal Benefit, if taken at FRA (Full Retirement Age) is always 50% of the other spouse’s PIA (Primary Insurance Amount).  This is not always the case, if the individual has begun receiving retirement benefits based on his or her own record before FRA and then later begins receiving the Spousal Benefit.

When an individual begins receiving retirement benefits based upon his or her own record has a lasting effect on the amount of all retirement benefits that this individual will receive, including Spousal Benefits.  This is due to the fact that the Spousal Benefit, when the retirement benefit is present, is an offset amount based upon the difference between the maximum Spousal Benefit (50% of the other spouse’s PIA) and the PIA of the first spouse.

The early retirement benefit amount calculation is fairly straightforward (at the link you’ll find a detailed explanation).  The individual’s PIA is reduced by a factor based upon the number of months prior to Full Retirement Age that he or she has applied for benefits.

Knowing the individual’s PIA, the next factor in the calculation is the other spouse’s PIA, and the maximum amount of Spousal Benefit will be 50% of that PIA.  This factor is available if the individual is at least Full Retirement Age.  The reduction in overall benefits is the difference between 50% of the second spouse’s PIA and the first spouse’s PIA.

Example

Okay, this is confusing as all get-out without an example.  Let’s say Dick and Jane are a married couple, with PIAs of $2,200 and $800 respectively.  Dick and Jane are both age 66, Full Retirement Age.  Jane started receiving her own retirement benefit at age 62, which is reduced to $600 since she started early.  Dick intends to delay his retirement benefit to age 70 for the maximum benefit.  Dick files and suspends his retirement benefit, which then allows Jane eligibility to file for the Spousal Benefit, while Dick’s benefit continues to accrue delayed retirement credits.

How much of a total benefit will Jane receive, under these circumstances?  Here’s how it works: Jane’s PIA is subtracted from half of Dick’s PIA – $1,100 minus $800 = $300.  This amount is the Spousal Benefit offset for Jane, which is added to her own benefit for her total benefit.  Adding $300 to $600 equals $900.  This is $200 less than 50% of Dick’s PIA (remember the pat answer from before?).

Another Example

Okay, what if there are a few changes to the above example: Dick is two years older than Jane – she’s 64 and he’s 66.  He still files and suspends at age 66, his Full Retirement Age, and Jane then applies for the Spousal Benefit at her current age of 64.

Here is the way this calculation works (and some shorthand for the reductions):

  • Determine Jane’s reduced monthly benefit ($600)
  • Take Jane’s unreduced PIA and subtract it from Dick’s unreduced PIA ($1,100 minus $800 = $300). This amount is referred to as the Excess Spouse Benefit amount.
  • If Jane is under Full Retirement Age (FRA), determine the number of months before FRA – in her case, it’s 24, as age 64 is 24 months before age 66.
  • Multiply the Excess Spouse Benefit amount by the amount determined by subtracting her number of months prior to FRA from 144.  ($300 times (144 minus 24) equals $36,000).
  • Then divide that number by 144 ($36,000 divided by 144 equals $250).  $250 is then added to her own retirement benefit amount to come up with the total benefit ($250 plus $600 equals $850).

Now, taking this one step further: If Jane is eligible for the Spousal Benefit more than 36 months before FRA (such as if Jane was 62 when Dick is 66), then the above calculations would be changed slightly:

  • Determine Jane’s reduced monthly benefit ($600)
  • Take Jane’s unreduced PIA and subtract it from Dick’s unreduced PIA ($1,100 minus $800 = $300). This amount is referred to as the Excess Spouse Benefit amount.
  • If Jane is under Full Retirement Age (FRA), determine the number of months before FRA – in this case, it’s 48, as age 62 is 48 months before age 66.
  • Multiply the Excess Spouse Benefit amount by the amount determined by subtracting her number of months greater than 36 prior to FRA from 180.  ($300 times (180 minus 12) equals $50,400).
  • Then divide that number by 240 ($50,400 divided by 240 equals $210).  $210 is then added to her own retirement benefit amount to come up with the total benefit ($210 plus $600 equals $810).

It should be noted that if Jane had not filed for her own benefit before FRA and she waits until FRA to file for the Spousal Benefit, she will be eligible for a Spousal Benefit equal to 50% of Dick’s PIA – assuming that Dick has filed for his own benefit, or filed and suspended.  Jane does not have to take her own benefit at this time, especially if her own benefit will potentially be greater than the Spousal Benefit.

Hope this helps to clear things up a bit.  If not, please leave your questions in the comments section below and we’ll work together to come up with answers.

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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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10 Comments

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  • I am completely confused. My husband is currently 66 and has filed and suspended so that our disabled adult child may receive SSDI rather than SSI giving him an increase. We intend to wait until my husband is 70 to take his benefits. I am 10 years younger than my husband. We are trying to understand what is best for us to do with regard to my receiving benefits. We would like to take benefits for me when I turn 62 (my husband will already be 72). Am I able to take spousal benefits at 62 and then take my full benefit at age 66 and 10 months (my FRA)? If so, does this change anything for me further down the road. We have been told that if I take “anything” early and my husband were to pass I would not receive his full benefit. His full benefit at age 70 will be $3,000. My benefit at FRA will be about $1600. I realize I have two questions here but we’ve not been able to get a clear answer.

    • On your first question: No, you cannot take spousal benefits at age 62 and then switch later to your own benefit. If you file for your own or the spousal benefit, effectively you will receive only the larger of the two. This applies to you at any age.

      Second question: Your age when you file for your own and/or the spousal benefit has no effect on survivor benefits. The age you take survivor benefits, if it is before your Full Retirement Age, could reduce a survivor benefit, but if it’s after your FRA you should be eligible to receive the full amount that your husband had been receiving prior to his death.

    • In order to calculate this benefit we’d need to know what your wife’s Primary Insurance Amount would be – this is the benefit that she would receive at Full Retirement Age (66 if she was born between 1943 and 1954).

      jb

  • i started taking benefits at 62 and am now 75 i get reduced benefits due to getting a pension not covered by SS. my wife also started taking benefits at 62. She is now 76. She gets 770 per month and I get 265 per mo.. Will spousal benefits be in our future ?

  • I started receiving social security benefits at age 62 and am now age 70. My wife will be 63 in a few months and wants to wait until full retirement age to start collecting her own social security benefits. Can she receive any excess spousal benefits now? If so how would this be calculated? Pros and cons of applying if applicable.

    • No, if she filed for spousal benefits prior to Full Retirement Age she would be affected by deemed filing, which would effectively require her to file for her own benefit AND the spousal benefit, both reduced from filing early.

      jb

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