Social Security is one of the most generous benefits for retirees. Not only because it provides for an individual settlement but also due to its liberal spousal benefits. As per the law, a spouse can claim a Social Security payment based on his or her own income record or as a certain percentage of the partner’s Social Security benefit. This particular source can function as an additional stream of income, especially in times of need. As per a 2019 Social Security report, more than 2.3 million individuals claimed their spousal benefits. These funds bring critical value for those who claim it at the right time. But it is important to know key facts and how these benefits are calculated to be well informed.
Here are some points to note about Social Security spousal benefits:
Regulated into the Social Security payments in 1939, the spousal benefits are one of the most reliable payouts. It helps expand the household income during retirement and also provides assistance to widows and widowers. It includes provisions for disabled retirees and children as well. However, these funds only accrue to the spouses of qualified taxpayers. Before applying for a spousal Social Security advantage, one needs to be sure of the terms and eligibility criteria. The rules for this are simple and easy to understand.
Before calculating the spousal benefits, it is important to know a few concepts. The most central is the primary insurance amount (PIA). This is typically the total monthly retirement advantage of a person, provided the claim is made at the full retirement age. This varies as per the birth year. For those born in 1960 or later, the official age is 67 years.
A Social Security spousal claim is calculated as 50% of the partner’s PIA, irrespective of the year of filing. Such as, X is born in 1960 and files for retirement benefits at the age of 62. In this condition, X is liable to get an amount that is lesser than the actual PIA. However, if X’s spouse - Y, claims for Social Security, the amount is arrived at by estimating 50% of the X’s PIA. This will not be factored in terms of X’s actual receipts. Instead, it is based on the official PIA.
On the other hand, even if X has filed after the retirement age, (which is supposed to increase the benefits), the amount for Y would not increase more than 50% of the PIA, irrespective of X’s actual receipt. But the amount is also affected by the age of the spouse filing for the advantage.
Note: Spousal funds by Social Security are layered. They are influenced by the PIA of both spouses. If one partner is receiving the worker benefit, he/she is entitled to receive his/her own Social Security, followed by the spousal security. If the partner is receiving a PIA which is greater than that of 50% of the spouse, there is no amount paid. Such as, for X with a PIA of $2,100 and Y with a PIA of $3,000, X will not be entitled to any security since the individual PIA is more than 50% of the partners.
That said, there is no increase in social security post the full retirement age. However, for benefits withdrawn before the official age, there is a reduction for the entire life. These reductions are different from those with working reimbursements. To understand this better, here in an elaborated calculation of the Social Security spousal benefits:
These calculations assume the official retirement age of a person to be 67 years and the PIA to be $3000.
The spousal benefit percentage for different retirement years:
The benefit amount for each age is equivalent to:
Early retirement affects the benefits. The spousal claims are maximized at the official retirement age and reduce as the partner files for the advantage before the authorized year. This reduction for early retirement is for a lifetime and has only certain restricted exceptions, like caring for a child who is younger than 16 or is disabled.
A divorced spouse can assert on the ex-spouse’s Social Security record. This is irrespective of whether the other partner is remarried or is collecting the advantage on their record. However, a few requirements must be met:
Also, the other partner can apply in case the ex-spouse has not filed for security yet. But the ex-spouse should have reached the retirement age and should be eligible for security. Moreover, the divorce should have been filed at least two years ago.
In the case of a deceased spouse, the surviving partner can also assert for the amount. Even though the survivor’s benefit can be claimed as early as the age of 60 years, there are certain provisions to it:
Overall, spousal benefits are a very secure stream of income, provided all eligibility criteria are met. One can file for these online on ssa.gov, or by calling 1-800-772-1213, or in person at the local Social Security office.
To maximize the payouts and for help in dealing with its complications, you can choose to consult professional Financial Advisors.
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