Ask Bob: Will my Wife's Spousal Social Security Benefit Be Cut?

Question: My wife turns 62 in July of this year and I will turn 66 in November. I was going to have her file for early retirement in July when she turns 62 then take the spousal benefit of mine when she turns 66. The spousal benefit of mine will be more than her full benefit. My question: Will her spousal benefit be reduced when she turns 66 if she takes early retirement on her benefit this July?

Answer: Given what you described, your wife's total benefit will be less than 50% of your Primary Insurance Amount (PIA) when she files at her age 66, since she filed for her own benefit before her Full Retirement Age (FRA).

But there's more to the story, depending on other circumstances, says Jim Blankenship, a certified financial planner with Blankenship Financial Planning, a blogger, and author of A Social Security Owner's Manual and Social Security for the Suddenly Single: Social Security Retirement and Survivor Benefits for Divorcees.

Are you filing for your Social Security benefit when you reach age 66 in November? Or are you planning to delay filing? "This is important, because if you wife has filed for her own benefit, as soon as you file for your benefit, she will be deemed to have filed for the spousal benefit since she is now eligible for that benefit," says Blankenship. "This will result in a reduction of the possible spousal benefit from 50% of your PIA -- the amount you receive if you file at exactly your full retirement age -- down to approximately 35% of your PIA."

However, if you are delaying filing for your own benefit to your age 70, your wife will be unable to file for spousal benefits until you have filed -- when she is approximately 66 years and 4 months of age, says Blankenship. If this is the case, at that time she'll receive 50% of your PIA (not the delay-credited benefit amount) minus the dollar amount that her own benefit has been reduced by since she filed early, he says.

Blankenship gave this example: Let's say your wife is eligible for a benefit of $800 if she waits until FRA. But if she files at age 62, this means her benefit will be reduced to $600, a reduction of $200.

Now, if your PIA is $2,000, and you delay filing for your benefit to age 70, she will receive (when you file at age 70) 50% of your benefit minus the $200 reduction, for a total benefit to her of $800.

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