How Claiming Social Security Early Will Affect Spousal Benefits
Even if you never worked a day, you could be eligible for Social Security benefits based on the earnings of your husband or wife. Or, if you worked but earned considerably less than your spouse, you could receive a boost in your own Social Security check.
While you’re eligible to take these payments as early as 62, the age when you request your benefits will impact the amount you receive. As with most things, timing is everything when it comes to Social Security.
Social Security Spousal Benefits: A Primer
Social Security spousal benefits date back to the 1930s, designed to give support to women who depended on their husbands for financial support. As the modern household has evolved into a two-income family, both spouses often are entitled to Social Security based on their own work, but the system hasn’t abandoned the lower-earning spouse.
You can receive spousal benefits if you are at least 62 years old and your spouse is receiving Social Security retirement or disability benefits. You also are entitled to benefits, at any age, if you are caring for a child under age 16 or for an adult child who was disabled before age 22.
When To Apply for Benefits
At full retirement age, the spousal benefit you’re entitled to is 50% of the benefit of the highest-earning spouse. If the Social Security you earned is $900 and your spouse receives $2,000, you will receive an extra $100 per month in spousal benefit to bring your payment to $1,000 — or 50% that of your spouse. If your own Social Security earnings exceed the 50% amount, you won’t receive a spousal benefit.
The amount of the spousal benefit you receive, however, depends on the age at which you file for Social Security, and there are two benchmarks: age 62 and 67, which is the full retirement age for workers born after 1954.
If you file at age 67, you will get the full 50% of your spouse’s Social Security payment. If you file at age 62, you will receive 32.5% of the spousal benefit. The amount increases on a sliding scale until you reach the 50% amount at age 67. The Social Security Administration has a calculator to provide the percentage you’ll receive by entering your date of birth and the month and year you want to receive benefits.
“It’s easy to take the money and run as soon as you’re eligible, usually when you’re 62,” said Lyle Solomon, a financial expert and consumer bankruptcy attorney in California. “After all, you’ve most certainly paid into the system for your whole working life and are now ready to collect your benefits. It’s also wonderful to have a monthly income guarantee.”
But should you apply for benefits?
“Three main characteristics that can influence when you collect Social Security benefits are your health, longevity and retirement lifestyle,” Solomon said.
The Disadvantages of Applying at Age 62
“Generally, if anyone is in good health and can pay monthly bills, deferring Social Security as long as possible makes the most financial sense,” said Paul Tyler, the chief marketing officer of Nassau Financial Group in Hartford, Conn.
Every month between age 62 and 67 that you can wait increases your eventual benefit.
“One of the best ways to maximize Social Security benefits is to utilize spousal benefits the optimal way,” said Chuck Czajka, a certified Social Security claiming strategist and the founder of Macro Money Concepts in Stuart, Florida.
“Taking early spousal benefits can impact benefits substantially. A spouse can take benefits as early as 62 years old, but this would result in a permanent reduction in benefits forever.”
Additionally, Czajka said, drawing on your benefits decreases the amount of money you can earn. If you’re 62, healthy and still enjoying your job, it pays to wait on your benefits. Your spousal benefits will be reduced if your job pays you more than $19,650 a year before reaching full retirement age.
“One thing to consider is if you are still working at 62, your benefits will be reduced and benefits will be withheld $1 for every $2 you earn over $19,560,” Czajka said. “This could mean thousands of dollars over your lifetime.”
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