An overheard office conversation reminded me that I have not written about spousal benefits in a while. A man wanted to know why his wife could not receive Social Security benefits through his record. Key to his thinking was that her own Social Security retirement amount was less than one-half of his, a very popular misconception.
Like many misconceptions, there is a historical basis for this. In the early days of Social Security often only the husband was employed, with the wife busy but unemployed at home. In addition, no one could begin monthly retirements before full retirement age because early retirement (age reduced) benefits did not exist yet. Now, both wife and husband are often employed and reduced retirement benefits can begin as young as age 62, with full retirement ages ranging from 65 to 67 under existing law.
Social Security benefits are gender neutral. Both men and women can receive spousal (wife/husband) benefits and each must be alive for spousal benefits to apply. Survivors benefits to a widow or widower are computed differently and might be payable even if a spousal benefit was not.
Returning to spousal benefits, the one-half idea has some validity but it refers to a comparison of the wife and husband’s individual full retirement age (FRA) amounts, not the monthly amount that either is actually receiving.
The most that a spouse with lower career earnings could receive through the record of her or his higher earning spouse is one-half of the higher earners full retirement age amount. This is a maximum and reduced by their own Social Security retirement and by age, if younger than FRA.
To learn if spousal benefits are possible, compare one-half the higher full retirement age (FRA) amount to the lower FRA amount.
For example, leaving aside the actual monthly benefit amount, say we have a couple where one person has a FRA amount of $2,000 and the other has a FRA amount of $900.
Half of the higher $2,000 FRA amount is $1,000. Since the other person’s smaller $900 FRA amount is less than this $1,000 (one-half of the higher) amount, a spousal benefit is possible. If the smaller FRA amount were $1,000 or more, and therefore not less than half of the higher, spousal benefits would not be paid.
Note that this only shows IF a spousal benefit is possible, not how much. How much a spousal benefit is depends on the person’s own Social Security retirement amount and their age. In this example, the MOST a spousal benefit could be is $100 per month, derived by subtracting the lower FRA amount of $900 from one-half the higher ($1,000) FRA amount. Potentially reduced for age, the net spousal amount is added to his or her own monthly retirement amount.
Using the same full retirement age amounts, but with age reduced benefits involved, you can see how the one-half of benefit misconception, rather than the FRA comparison, can lead you astray.
Using the same couple, one person has a full retirement age (FRA) amount of $2,000 and the other has a FRA amount of $900.
However, now the person with the $2,000 FRA amount started retirement at age 62 (with age 66 FRA), giving him or her a benefit reduction of about 25 percent, resulting in a monthly amount of about $1,500.
The person with the FRA amount of $900 waited until full retirement age before starting Social Security. Since he or she waited until FRA, there is no age reduction and the full FRA monthly amount of $900 is received.
Comparing the actual benefit amounts of $1,500 and $900, one-half of the higher is $1,500 divided by 2 = $750. Given that the overall smaller benefit amount of $900 is more than one-half the higher $1,500, you would wrongly conclude that spousal benefits are not payable.
Use the Retirement Estimator to estimates your personal full retirement age amount. Learn your full retirement age and obtain approximate monthly reduction percentages at http://www.socialsecurity.gov/retire2/agereduction.htm.