Over the past 10 years, I have spoken to many groups on Social Security about ways to consider maximizing benefits. A subject area that gets a lot of questions is the claiming of Spousal Benefits. The spouse who earns the most over their working lifetime is considered the primary worker. Social Security is gender neutral. Unless a person is disabled or a surviving spouse, the earliest time one can file for benefits is age 62. For those born in 1960 or later, full retirement age (FRA) is 67. If you file early, you get less. Period. Unless you need the money or have health issues, it pays to wait.
Spousal benefits are one-half of the primary worker’s benefit. For example, Jane and John are married. Her benefit at FRA is $3,000 and John’s is $1,400. Jane is the primary worker. The benefit amount of the person qualifying for the spousal benefit (in this case John) must be less than one-half of Jane’s benefit, as it is in this example. John cannot claim the spousal benefit until Jane claims her benefit. If she has not claimed her benefit and John claims, he will receive the benefit based on his working record. Remember, if you claim the benefit early you get less. Assume John was born in 1962 and he claims at age 62 in 2024. Jane has not claimed her benefit. Based on his own record, he will only receive 70% of his full benefit ($1,400 x 70%= $980).
Divorced spouse benefits are similar to those of spousal benefits but the marriage has to have lasted at least nine years. The divorced spouse claiming the benefit must be unmarried. If the divorce happened at least two years prior, the ex-spouse does not have had to file for benefits.
One other thing to consider. If you claim for benefits before FRA and continue to work, $1 dollar of benefits will be deducted for every $2 earned above $22,320 in 2024. If you reach FRA in 2024, $1 will be deducted for every $3 dollars you earn above $59,520. In many cases, it does not make any sense to claim early if you continue to work.
Also, there are surviving spouse benefits. Unless in case of accidental death of one of the spouses, the marriage had to last for at least nine months. A surviving spouse may claim benefits at age 60, but remember if continuing to work, benefits as described above, may be withheld. The limitations on claiming early apply- if you apply early you will receive less.
There are certain strategies to consider regarding claiming spousal benefits, but this is a starting point. If you want more information, or want a personalized analysis please drop me an email: cstanley@janney.com
If you are interested in learning more about this subject, please call me at 803-223-7008 or send an e-mail to cstanley@janney.com. Chip Stanley is an Accredited Investment Fiduciary, Chartered Retirement Planning Counselor, Certified Wealth Strategist, Certified in Long-Term Care, and a Financial Advisor in the Columbia, S.C. office of Janney Montgomery Scott, LLC. He is a member of the Great South Advisory Group, www.greatsouthadvisorygroup.com.
