A Few Vital Points That You Should Know About Social Security Spouse Benefits

When most people think about Social Security, they naturally think of retirement benefits. However about 1/5 of all Social Security benefits are spousal or survivor benefits, so when you are planning for retirement, it is vital to consider the fact that you or your spouse may collect Social Security survivor benefits or spousal benefits at some points in their life.

In this article, we are going to talk about the fundamentals of Social Security spousal benefits.

Generally, a married person can receive a spousal benefit equal to half of her husband's basic benefit, also referred to as the PIA (primary insurance amount).

Social Security spouse benefits usually come into play when one spouse takes time away from work to raise a family, and therefore has little or no income.

Calculating the Spousal Benefit:

The spousal benefit is in fact a combination of both spouses' benefits. If a married person has sufficient credits to qualify for Social Security on her own, then her credit will be calculated first. If it's less than her spouse's benefit, she will receive her benefit plus an adjustment to equal half of her husband's primary benefit.

When Should You Begin the Spousal Benefit:

You could apply for the spousal benefit as early as at the age of 62, as long as the working or higher earning spouse is eligible and has applied for benefits.

It does no good for the lower earning spouse to wait beyond her full retirement age to apply for spousal benefits because the spousal benefit will not earn credits beyond the full retirement age. Therefore, spouses applying for the spousal benefit must do so when they reach complete retirement age.

How Early Retirement Affects The Spouse Benefit:

Spouses who apply for the spousal benefit before she is full retirement age will receive a reduced benefit just like she would if she applied for her own Social Security benefit before full retirement age. This reduced benefit is permanent, even if she takes her spousal benefit at age 62 and switches to her own benefit at complete retirement age.

Some other Issues:

Individuals who start collecting retirement benefits before full retirement age can only earn up to a certain amount before they have to pay back part or all of their Social Security benefits. In 2009, that amount is $14,160. If you earn higher than $14,160, you need to pay back $1 for each $2 you earned over the limit.

This earnings test applies to spousal and survivor benefits in addition to retirement benefits, so if you expect to work before you reach full retirement age, you should delay your retirement and spousal benefits.

In this article, I have referred to the wife as the lower earning spouse out of simplicity. However, in today's world, it is not uncommon for the wife to be the higher earning spouse. The great news is that Social Security is gender neutral, therefore the Social Security spouse benefits can apply to the wife or husband, in addition to the higher or lower earning spouse.

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