By: Bob Braunstein, Federal Benefits Specialist
Published: September 2023
When you file for your Social Security benefit, the amount you receive is generally based on your work earnings – income that you earned while working subject to the Social Security payroll tax. Your benefit could otherwise be based on the work history of a spouse or former spouse, or as a survivor of either if it is higher than your work-based amount.
When married and claiming a Social Security entitlement benefit, you are deemed to be filing for a spousal benefit if: 1) your spouse is receiving Social Security benefits, and 2) your spouse’s Primary Insurance Amount (PIA) is more than twice the size of your work-based entitlement. PIA is the amount claimed at one’s Full Retirement Age or FRA (generally between ages 66 and 67 based on year of birth).
Here is an example of how deemed spousal filings work:
Fred files for his $3,000 per month Social Security PIA age 67. His spouse, Martha, who is also 67, files for her $1,200 PIA shortly thereafter. When she files, she is deemed to be filing for a spousal benefit (because Fred is receiving his benefit). Social Security pays her the $1,500 amount spousal amount because it is $300 higher than hers. If Martha’s own entitlement had been more than $1,500, Social Security would have instead paid her that amount – i.e., there would be no payable spousal benefit. (Spouses in similar scenarios born prior to 1954, might also be able to restrict their claim to a lower spousal benefit first and later claim their own benefit when it is higher – known as a “restricted application”).
If you have a former spouse, a higher entitlement based on their work history could be available to you if you apply for it when you are single, you were married to your former spouse for at least 10 years, and your former spouse is eligible for or is receiving Social Security benefits.
Higher benefit amounts can often be paid when one has a Social Security survivor entitlement. For example, if your monthly benefit is $2,000 and your spouse passes away with a benefit of $3,400, you could increase your benefit to the higher $3,400 survivor amount if you claim it at your FRA or older. A similar survivor benefit is payable against a former spouse. But you must be unmarried or not remarried until 60 years of age or older to claim it. Social Security will also allow you to claim any survivor benefit before your own work-based benefit. This will be to your advantage if your benefit is still increasing and will eventually be higher than the survivor entitlement – between 62 and age 70, work-based benefits increase to up to 132% of PIA.
Whether your benefit is work-based, spousal, or survivor-based, it will be lower if you claim it prior to reaching your FRA. Work-based benefits are reduced by up to 30% when claimed at age 62; spousal benefits claimed at 62 are reduced to 32% of a spouse’s PIA, vs the 50% FRA amount; and survivor benefits claimed at 60 – the earliest survivor benefit eligibility age – are reduced to 71.5% of the deceased spouse’s benefit vs. the full FRA claimable amount. Any of these benefits claimed prior to FRA could also be reduced if you continue working. Working income will usually reduce a benefit by $1 for every $2 of earned income above an annual allowable amount ($21,240 this year). For those fully retired, it’s important to know that work income does not include Federal annuities, distributions from TSP and similar retirement plans, investment income, rental property, or other passive income. For those who aren’t, it is equally important to know that the work income restriction will end at their FRA – and that delaying their benefit claim to this point will have made it as much as 30% higher than it would have been at age 62!
Bob Braunstein is a retired Federal employee who was last employed as a Senior Human Resources Consultant with the Office of the Comptroller of the Currency (OCC) at the Department of the Treasury. During his Federal career, he served in a full range of HR positions spanning recruitment, staffing, employee relations, retirement and benefits, and position classification/management disciplines. He is a retirement and benefits presenter for NITP.
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