Brandon Renfro, CFP®, RICP, EA
6 min read
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I’m 57 and my wife is 48. Both of us work, but my wife makes much less money than I do (almost 1/3 of what I make). I am planning to retire at age 66 and start collecting Social Security benefits.
It is my understanding that I will be eligible for full benefits ($3,653 per month) and my wife can collect half of my benefit ($1,826) since it’s more than what she can get from her earnings record.
However, if she decided to delay her Social Security benefit and continue to work until age 66, her own retirement benefit will exceed $1,826 (50% of my benefit). My question is: Can she do that?
-Shad
Your wife can collect her spousal benefit based on your earnings record and then switch to her own later on, but it doesn't quite work the way you've laid out. Your question suggests that we may need to clarify how Social Security works. Understanding your options can help you create a strategy that fits your situation.
A financial advisor can help you plan for Social Security and integrate those benefits into a comprehensive retirement plan. Connect with an advisor today.
The age at which you can begin collecting your full benefit is called your full retirement age. For anyone born in 1960 or later, full retirement age is 67. For you, that means filing at age 66 would be one year early. Your benefit would be reduced by 5/9 of 1% for each month filed early-about 6.7% for a full year.
Alternatively, you could delay filing and earn delayed retirement credits to increase your benefit. For each month you delay Social Security beyond your full retirement age, your benefit increases 2/3 of 1% or 8% per year. Delaying until age 70 could increase your benefit by 24%, after which no additional credits accrue. (And if you need help deciding when to file for Social Security, speak with a financial advisor.)
When a person files for Social Security benefits, they can either claim their own retirement benefit based on their earnings record or claim a spousal benefit based on their spouse’s earnings record.
As you've pointed out, the spousal benefit is generally 50% of the higher earnings spouse’s benefit. Specifically, it is 50% of the amount you would collect at your full retirement age. This is called your primary insurance amount or PIA.
It is not reduced if the primary earner files early, and it does not earn delayed filing credits. Her spousal benefit is based on the amount you would receive at full retirement age, regardless of when you file.
