Kotlikoff On Social Security: How Are Spousal Benefits Calculated?
I’m confused about the spousal Social Security benefit. Let’s say I start collecting at age 63 and receive $1,500 a month, and my spouse, who’s 65, is eligible for $400 a month on her own. Would she receive $400 plus half my benefit? And if she gets half of my $1,500, does that mean I get only $750?
—Robert, Thurmont, Maryland
Your $1,500 a month (which I presume is your full retirement benefit reduced because you are taking it early) is not affected by what your spouse collects on your record.
She would collect her $400 (her full retirement benefit reduced because she is taking it early) plus her reduced excess spousal benefit, which she will be forced, due to Social Security’s deeming provision, to take at the same time. Her excess spousal benefit equals 50% of your full retirement benefit less 100% of her full retirement benefit. This amount will be reduced by roughly 7% because she is taking it at 65 and not 66—her full retirement age.
So we’re probably taking about her collecting roughly $775 per month. If you follow this strategy, be aware that you can suspend your own retirement benefit at 66 and restart it at 70 at a 32% higher level. To see whether this strategy is optimal, however, you would have to consult a Social Security software service, such as the one I own, maximizemysocialsecurity.com. (The cost: $40.) [4/30/15]
Boston University economics professor Laurence Kotlikoff is an expert on Social Security. His Maximize My Social Security service can help you figure out how when and how to claim benefits to get the highest lifetime benefits, while his ESPLanner tool can help you achieve a stable living standard before and during retirement. He is a co-author of Get What’s Yours: The Secrets To Maxing Out Your Social Security.