Jan 19, 2016 - 12:20 PM
A key point to understand is the Spousal benefit is never larger than 1/2 of your benefit at age 66. The Spousal benefit is determined by the age of your spouse when she files and your Full Retirement Age (FRA) benefit . FRA for people born between 1943 - 1954 is 66. The actual calculation is 1/2 of your FRA benefit less your spouse's FRA benefit equals the spousal excess. This spousal excess amount is then added to the benefit amount filed for at any given age (in this case to her current benefit). Since your wife filed early (and received a reduced benefit amount - not her FRA benefit) her spousal benefit will be slightly less than 1/2 of your FRA benefit.....very complicated. Oh, in the case of a married couple only one spouse can file for spousal benefits on the other - not both.
There are a number of strategies I would suggest investigating with a financial advisor who specializes in Social Security benefits before you file:
1. Should your wife file for Spousal Benefits?
2. Should your wife incorporate a Stop & Start strategy? Suspend her benefits at age 66 (which will let her own benefit record grow by approximately 32% up to age 70) and switch to collect Spousal benefits between 66-70 (which may be smaller or larger), and later switch back and re-start her own ( presumably larger) benefit at age 70.
3. What is the best age for you to file?
4. Should you file for Spousal benefits instead of your wife (between age 66 -70), and let your own benefits max out at age 70.
5. If you were born before April 30, 1950, should you incorporate File & Suspend
I suggest a financial advisor because the Social Security website or employees will not be able to tell you how to maximize Social Security. They will only be able to tell you what your benefit will be at any given age. Developing a strategy to maximize Social Security could result in a significant amount of income over your lifetime. It may impact the income of the surviving spouse. Remember, when one of you passes away the smaller of the two Social Security check goes away....this is the Survivor benefit.
Please feel free to contact me if you have more questions.