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Three Part Series On Social Security: Part Two

“The Social Security shopping mall has 81 stores for married couples.”

There are a lot of opinions, articles, and information out there about Social Security. In this Retirement Report, we’ve pulled some important material about spousal benefits to help you make sense of your options. If you have any questions, please don’t hesitate to reach out to us by replying to this email or giving us a call.

I can’t take credit for this quote – but I love it. It’s a clever way to articulate something you’ve heard me say many times about Social Security. There are a lot of choices. A one-size-fits-all approach won’t cut it. Your Social Security decision has to be tailored to you.

Those who were married for at least ten consecutive years can claim their own benefits based on their earnings – or half of their spouse’s benefits, whichever is higher, once they reach full retirement age.

Should the higher-earning spouse start taking benefits earlier than full retirement age, the spouse’s benefit will be less.

Covered workers need 40 credits to be eligible for their own benefit, which works out to be about ten years of work history. Your benefit is calculated based on your average earnings over the highest-earning 35 years.

When spouses take time off from the workforce to have children, raise children, or even provide care for senior parents, years with part-time or zero earnings may factor into the 35 years and result in a much lower benefit than people who work full time throughout their adult lives. This is why many women might qualify for a higher benefit based on their husband’s work history.

Plan for Surviving Spouse

Common sense may tell you that — among couples — the higher earner should claim benefits as early as possible, and the lower earner should delay to receive a higher benefit. In reality, the exact opposite may be the better option because if the higher earner claims early and then dies first, he or she is likely to have shortchanged the lower earner’s survivor benefit.

In this scenario, the higher earner should consider delaying claiming benefits so the lower earner can claim the highest possible benefit for life — whether it’s the lower earner’s own benefit or a derivative of the higher earner’s highest available benefit. If the lower earner dies first, there is no lost benefit, as the higher earner simply keeps their own benefit.

Options for Spouses

Because of changes brought on by the Bipartisan Budget Act of 2015, a very small group of people still have the option to choose between claiming benefits based on their own work history or their spouse’s work history. Only those who were 62 years old or older by Jan. 1, 2016, retained the option to claim only spousal benefits when they reach full retirement age (assuming their spouse had either claimed benefits or was able to file and suspend their benefits). Doing so allowed them to continue working and accruing earnings contributions and DRCs (delayed retirement credits) until they turn 70. At that time, they could begin claiming their own higher benefit amount.

If you were born on or after Jan. 2, 1954, you are no longer able to claim spousal benefits only. Instead, you will be subject to what is known as “deeming rules.” Based on the Bipartisan Budget Act of 2015, deeming rules apply through age 70 and mean that once you reach age 62, if you file for benefits and are eligible for both your own retirement benefit and a spousal benefit, you will be deemed to have applied for both benefits.

This new provision also eliminated the restricted benefit option, which had allowed anyone who had reached full retirement age to apply for a restricted benefit based on his or her spouse’s earnings, provided the spouse was already receiving benefits. This was true even for the spouse who was the higher earner. He or she could restrict the benefit to the spouse’s lower benefit, allowing their own benefit to accrue DRCs up to age 70 and then switch to their higher benefit amount.

With the new deeming rules, the restricted benefit is no longer available to anyone who was not 62 years old by Jan. 1, 2016.

Divorced Spouse

If a couple was married for at least ten years and then divorces, either one of the spouses may qualify for Social Security benefits at age 62 under the other’s work history. Even if the higher-earning ex-spouse has not applied for benefits yet, as long as he or she is eligible for them and the couple has been divorced for at least two years, the other ex-spouse can still receive benefits.

Once an ex-spouse remarries, he or she is no longer eligible to receive a benefit based on the first spouse’s work history unless the second (third, fourth, etc.) marriage ends in divorce, annulment, or death. You are eligible for the highest derivative available from any number of ex-spouses as long as each marriage lasted at least ten years and you are not currently married.

Widowed Spouse

Among married couples, the age at which the higher-earning spouse applies for Social Security benefits is significant, since the surviving spouse is entitled to the higher of his or her own or the deceased spouse’s benefit. The higher earner can increase the survivor’s benefit by waiting to receive any benefits until age 70.

If the higher-earning spouse dies, the widow(er) is entitled to the higher earner’s full retirement benefit and may begin receiving benefits starting at age 60 (or at any age if he or she has a dependent who is under age 16 or disabled). Should the widow(er) remarry prior to reaching age 60 (or age 50 if the widow(er) is disabled), the Social Security benefit for the widow(er) will terminate, but the benefit for the eligible child will not.

A surviving spouse may also claim a reduced benefit on the deceased’s working record and then switch to their own later. The surviving spouse may wait until full retirement age or delay benefits until age 70 to accrue DRCs based on his or her own work history. Once the survivor applies for their own benefit, the payout will automatically be at the highest amount.

This Retirement Report is the second in a three-part series on Social Security. To read part one on the status of Social Security and timing your benefit, click this link. Part three will cover how having a job impacts your Social Security benefit – look for that in the August Retirement Report.


Sources: Social Security Administration, “Retirement Benefits.” The Balance Money, “Restricted Applications for Social Security Benefits.” Yahoo! News, “Married couples have 81 ways to claim Social Security. Here’s how to maximize your benefits.


Sources:  Center on Budget and Policy Priorities and FDIC.gov

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