Make an early claim for social security? This is how spouse benefits come into play
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Entitlement to social security before full retirement age can be disruptive for some people with respect to spousal benefits.
For starters, not all early filers will have immediate access to these benefits, and even those who find it may not get into a bigger monthly check.
“A lot of people are confused about spouse benefits,” said David Freitag, social security expert and financial planning advisor at MassMutual.
One reason for this is that the rules on spousal benefits for people born after January 1, 1954 have been changed in accordance with the 2015 legislation.
“Then all the creative materials for younger people went away [beneficiaries], “Friday said.
While it can seem complicated, two things to keep in mind about spousal benefits in general are:
- It is capped at 50% of the benefits your husband or wife would receive at full retirement age.
- You can only take advantage of these benefits if your husband or wife is already receiving social security.
It’s also important to note that if your spouse died, you would be claiming survivor benefits, not spouse benefits. (More on this below.) And if you were born before 1954, you as a spouse may have different strategies.
You may know that your own social security benefits will be reduced if you claim them before your full retirement age, which is currently either 66 or 67 depending on your year of birth. (If you claim beyond that age, it also means your benefits will be higher, increasing 8% annually until you are 70 years old.)
Around 69% of the 43.7 million retirees in 2018 received reduced benefits because they were tapped before their full retirement age, according to the Social Security Agency. You can apply for benefits at the age of 62 at the earliest.
However, filing them early would also affect any spouse benefits for which you qualify, Friday said.
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Regardless of whether your husband or wife made a claim early or waited until full retirement age (or later).
The earlier you claim, the higher the discount.
For example, let’s say your spouse’s monthly benefit in full retirement is $ 2,000, so 50% – the maximum you could qualify for if you waited to be submitted – is $ 1,000.
If you opt for social security at age 62, your spouse’s benefit will be $ 650, or 35% less, said certified financial planner Peggy Sherman, a senior advisor at Briaud Financial Advisors in College Station, Texas.
Remember, too, that you would not get both the benefit of your own deed and the spouse’s benefit – you would get the higher of the two. Use the scenario above: If your monthly benefit is less than $ 650 by the age of 62, you will receive $ 650. If your benefit were greater, you would not receive a spouse benefit.
You also don’t need to file an additional application to see if the spouse benefits would give you a monthly boost – you are automatically considered a spouse as well.
If you don’t have a work record to qualify for, you can receive spouse benefits at the same maximum of 50%.
If your husband or wife has claims beyond full retirement age – which means their benefits would have continued to increase – the maximum of 50% will be applied to the full retirement age amount, not the spouse’s higher benefit.
bits and pieces
If your spouse is not yet receiving benefits and you apply for yours early, you are not yet entitled to spouse benefits.
If your spouse applies, you are entitled to spousal benefits. However, since you filed ahead of schedule, you are still not eligible for the full 50%.
“The spouse benefit would still be reduced because you filed early,” said Sherman.
The spouse’s benefit would still be reduced because you filed a claim early.
Senior advisor at Briaud Financial Advisors
In other words, the only way to be eligible for the full 50% of spouse’s full retirement benefit is to wait until your own full retirement age – even if your spouse filed early, Sherman said .
If you are divorced and the marriage lasted at least 10 years, you can make a claim on your ex-spouse’s file if you did not remarry. The same maximum of 50% would apply. If this percentage is more than your own benefits in filing, you will receive the higher amount. (And no, it doesn’t affect your ex’s benefits.)
If your spouse dies, you are entitled to survivor benefits, which are usually 100% of your wife’s or husband’s benefits. If the amount is higher than your monthly payments, you will receive the higher amount.