by Michael Morelli
(Gloucestercitynews.net)(July 8, 2020)--Social Security spousal benefits are considered to be the most confusing benefit since they are actually a family benefit. However, the calculation of the benefit is even more complicated. First, we will try to determine whether you are eligible to use the benefit to your advantage.
To qualify for Social Security spousal benefits:
- It is essential for you and your spouse to be at least 62 years of age
- Both of you must be married for at least one year
- It is essential for the other spouse to receive his or her worker benefit
The majority of the individuals are of the notion that they are entitled to half of the benefit received by their spouses. However, it is true only in case you happen to be filing for spousal benefits when you have reached your retirement age.
Spousal benefits are going to be ascertained at the age when you are filing as a spouse. The amount of the (PIA) Primary Insurance Amount is going to be the only relevance your spouse has.
Calculated Using Both Your Primary Insurance Amounts and Your Spouse's Primary Insurance Amount
It is a fact that spousal benefits will be layered above any worker benefit, which you might have. In case you do have your worker benefit, you will be paid that particular benefit initially. Then, any spousal benefit amount is going to be layered on top of that.
To figure out whether you are eligible for receiving the spousal benefit, if your personal Primary Insurance Amount happens to be more than half of the Primary Insurance Amount of your spouse, you will not be eligible for a spousal benefit. For instance, your Primary Insurance Amount happens to be $1,250, and that of your spouse happens to be $2,000. Since your Primary Insurance Amount is more than half of your spouse, you will not be able to receive any spousal benefit, and you will be paid your personal worker benefit since it happens to be greater.
It is a fact that spousal benefits are not going to increase following your full retirement age. Therefore, you should consider filing for these benefits when you have reached your retirement age to obtain the maximum amount.
Spousal Benefit Reduction Due to Own Retirement Benefit
In case you happen to be receiving your retirement benefit, your benefit being a spouse is going to be minimized by the greater of:
- Your monthly retirement benefit or
- Your Primary Insurance Amount
For example: Apart from receiving a benefit as a spouse of Jane, Bob is likewise getting his own personal retirement benefit. He will not be able to receive the full spousal benefit (which is 50% of the Primary Insurance Amount of Jane) since he is eligible for his own retirement benefit. Rather, Bob's spousal benefit will be minimized by the greater of either his personal Primary Insurance Amount or his monthly retirement benefit.
Spousal Benefit Reduction Due to Early Entitlement
In case you happen to file for a spousal benefit by visiting Social Security Administration near you before your full retirement age, the spousal benefit will be reduced because of your early filing. This reduction happens to be 25/36 of 1% for every single month early for as many as 36 months. The reduction will be 5/12 of 1% for every month, which is in excess of 36 months.
For example, the full retirement age of Bob is 67 years. He files for his retirement as well as spousal benefits when he is 65 years of age (which is 24 months earlier). Thus, there will be a reduction in his spousal benefit by 16.67% (24 x 25/36 of 1%).
The ultimate calculation of the spousal benefit of Bob is going to be 83.33% x (half of the Primary Insurance Amount of Jane minus that of Bob). Moreover, Bob's own retirement benefit would be added to that for finding the total amount of Bob's monthly benefit.
File and Suspend
The taxpayers could file for benefits before 2016 (making their spouses entitled to claiming spousal benefits). Following this, they suspend their payments to maximize the filing credits which have been deferred. This particular "file-and-suspend" technique implied that it would be possible for a lower-income spouse to use spousal benefits to his or her advantage while delayed retirement credits would be accrued by the primary earner, thus enhancing their amount of benefit.
Nevertheless, this kind of loophole had been closed in April 2016 with the 2015 Bipartisan Budget Act.
Although it is nevertheless feasible to file for spousal benefits, and following this, temporarily suspend the payments, other benefits that will usually be obtainable on your account (like spousal benefits) will not be payable anymore at the time of such suspensions.
Likewise, the 2015 regulation does not allow the taxpayers to double-dip by means of claiming spousal benefits whilst amassing overdue retirement credits on their personal accounts.
It was earlier possible for all those entitled to both benefit types to claim spousal benefits initially and delaying a claim on the personal account, which is sometimes known as a restricted application. In this way, the taxpayers could take advantage of the earlier spousal payment and maximize their personal benefits by means of delayed retirement.
Availability of Other Benefits
In case Social Security tax has never been paid by you, then your only retirement income source will be the spousal benefits. Nevertheless, in case you are entitled to get payments from any foreign employer or government pension, you might still be capable of receiving spousal benefits, although at a reduced rate.
Your spousal benefit amount will be minimized by two-thirds of your pension amount in case you receive government pensions for jobs for which Social Security taxes aren't withheld.