Will Early Social Security Spousal Benefits Reduce My Spouse’s Retirement Benefit?

Today’s Social Security column addresses questions about what effects early Social Security spousal benefits can have in various benefit rates, how delayed retirement credits are applied and how a public pension can affect survivor’s benefit? Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Will Early Spousal Benefits Reduce My Spouse’s Social Security Retirement Benefit?

Hi Larry, If I draw spousal benefits early, will it reduce my husband’s PIA? And will my benefit be reduced due to not waiting until I am 66 1/2? I was told it would. The rep said I am eligible to get up to the full 50% of his PIA if I were to waiting until age 66 1/2, but we may not be able to wait that long.

One rep said there is no reduction to my husbands PIA because of drawing Spousal Benefits early, another says there is. What is the correct answer and were might I find this please? Thanks, Carol

Hi Carol, Yes, spousal and excess spousal benefits are reduced for age unless you start drawing them at your full retirement age (FRA) or later. The reduction percentage is 25/36ths of 1% for the first 36 months of reduction, and 5/12ths of 1% for each additional month of reduction. So for example, if a person starts drawing spousal benefits 48 months prior to FRA, their spousal rate would be reduced by 30% (i.e. 25/36 x 36 months + 5/12 x 12 months).

A worker’s primary insurance amount (PIA) isn’t reduced if their spouse receives spousal benefits. Spousal benefits are auxiliary benefits paid in addition to the worker’s benefit, they don’t take away from the worker’s benefit.

In other words, your husband’s benefit rate won’t be affected by you drawing spousal benefits, but if he starts drawing his benefits prior to FRA then his benefit rate will be reduced for age. Best, Larry

Do Benefit Rates Increase Incrementally Or All At Once?

Hi Larry, when you delay filing, are the increases applied incrementally or all together? Thanks, Jeff

Hi Jeff, Social Security calculates a person’s primary insurance amount (PIA), which is the amount they’d be paid if they start drawing their Social Security retirement benefits at their full retirement age (FRA).

PIAs are calculated based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings. PIAs can also be recalculated after any year in which a person earns enough to make that year one of their 35 highest earnings years.

If you start drawing benefits prior to FRA, your benefit rate is reduced based on the number of months that you start drawing prior to FRA. And if you start drawing retirement benefits after FRA, you receive delayed retirement credits (DRC) for each month that you don’t collect your retirement benefits from FRA until 70. So in other words, your benefit rate would be different every month between ages 62 and 70 depending on which month you choose to start drawing your benefits.

You may may want to consider using my company’s software — xxxxx — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can My Wife Receive Part Of My Social Security After My Death?

Hi Larry, If I worked in the private sector all of my career contributing to Social Security and my spouse is a teacher who doesn’t contribute to Social Security, is there any way she can receive a survivor’s benefit after I’m deceased? Thanks, Arthur

Hi Arthur, The answer to that depends of several factors. Widow’s can be paid up to 100% of their deceased spouse’s benefit amount, but if your wife is receiving a teacher’s pension then her widow’s benefits would otherwise almost certainly be at least partially offset due to the Government Pension Offset (GPO) provision.

The GPO can cause survivor benefits to be offset by 2/3rds of the amount of government (i.e. federal, state or local agency in the US) pensions they receive that are based on their earnings which were exempt from Social Security taxes.

So assuming that your wife receives a government pension based on her non-Social Security covered earnings, it sounds like she’ll probably only be eligible to collect widow’s benefits if 2/3rds of the amount of her government pension is less than her widow’s benefit rate. Best, Larry