To use this table, find your Year of Birth in the first column. Move right until you reach the age that you wish to begin early benefits. This figure is the amount of reduction from your Primary Insurance Amount (PIA, see the explanation above) that you will experience by filing at this age.
At the earliest filing age of 62, for a person who was born in 1960 or later the reduction factor will be -30%. In other words, if this person files for benefits at age 62, the benefit would be 70% of the amount that this person would receive if he or she waited until Full Retirement Age (FRA) of 67 to file for benefits.
(FYI - there is also a maximum age for all people, after which your Social Security benefit will no longer earn delayed credits, and that is age 70. Delaying receipt of your benefit after Full Retirement Age causes an increase to your benefit, up to age 70.) 3. A Spousal Benefit can be available to one spouse or the other but not both. The maximum amount that this benefit could be is 50% of the other spouse’s Primary Insurance Amount (PIA, the amount that he or she would receive at Full Retirement Age). The 50% amount is available if the spouse applying for the Spousal Benefit is at least Full Retirement Age. If he or she is younger than Full Retirement Age, a reduced amount could be available. The reductions are listed below:
Following the example listed above where a person born in 1960 or later files for Spousal Benefits at age 62, the 50% factor is reduced by 35%. In other words, the Spousal Benefit factor for this person would be reduced to 65% of the full 50% factor, which calculates to 32.5% of the other spouse's PIA.
4. Furthermore, the Spousal Benefit is only available if the other spouse has filed for benefits already. Stay with me on this - it’s confusing. This means that until the other spouse files for retirement benefits, the first spouse can’t file for Spousal Benefits. Once the other spouse files for retirement benefits, the first spouse, as long as he or she is at least age 62, can file for Spousal Benefits. It’s important to note that the Spousal Benefit is available only to one spouse in the couple at at time - not both, so you have to choose which option works out better for you and your spouse.
5. At Full Retirement Age, a special provision is available that allows one spouse or the other to file for her own benefit and then suspend receiving the benefit; this will enable the other spouse to file for Spousal Benefits based upon the first spouse’s record. Since the one spouse has suspended receiving her benefit, she can continue to accrue delayed retirement credits up to age 70, while at the same time the other spouse is now eligible to file for Spousal Benefits based upon her record.
6. If the Social Security recipient is filing for benefits prior to Full Retirement Age and he is also eligible for the Spousal Benefit at the same time (that is, his spouse has already filed for her own benefit), then another special provision applies, called Deemed Filing. Deemed Filing requires that, if the individual is eligible for both the Spousal Benefit and his own benefit and is younger than Full Retirement Age, then that individual must file for both benefits at that time. The only other alternative is not filing for either benefit.
If the individual is not currently eligible for the Spousal Benefit and he is filing for his own benefit prior to Full Retirement Age, Deemed Filing does not apply - even if a month later his spouse files for her own benefit, making this first spouse eligible for the Spousal Benefit. Deemed Filing only applies in the first month that the individual is filing for his own retirement benefit, and then only if he is younger than Full Retirement Age. (Roles could be reversed, as always.)
Now, with this additional background information, you should be able to go back to the first article and it will (hopefully) make more sense.
Keep in mind what I mentioned at the beginning: this is complicated. Don’t expect to pick up on it immediately. If all this does is raise questions, feel free to post your questions in the comments and I’ll try to address your questions as best I can.
In addition, bear in mind that I am an independent financial advisor; I don’t work for the Social Security Administration. As such, in these articles I am reporting the way the system works - not advocating it, not agreeing with it, not defending it. I agree that many of the provisions of the system can be unfair when applied, but I don’t have any sway with the Social Security Administration to fix the problems. I’m a taxpayer just like you, and I have to deal with the system the way it stands as well.
I have spent quite a bit of time studying how the system works in order to help my clients. As a result of my study of the system, I’ve also written a book that you may find useful - A Social Security Owner’s Manual. The Spousal Benefit and many other confusing provisions of the Social Security system are explained in the book.
