Many people are usually confused about the benefits of a spouse or an ex-spouse. People also wonder what happens with their spousal benefits if claimed before or after the full retirement age.
We will shed light on these three rules to clear out these confusions
• Benefits for Spouse and Ex-Spouse
To qualify for a spousal benefit, it doesn't concern an ex-spouse. Although your spouse should file for their own interests.
If you want to claim spousal benefits based on the earnings of an ex-spouse, they must be 62 years and qualified for the benefits. They, however, do not have to file for the benefits
If you want to claim spousal benefits based on the earnings record of your spouse, your present spouse should have filed for their benefits. Also, you must have even been married for at least nine months.
For married couples, there is something called the file and suspend." Based on this strategy, one spouse can file and also suspend the benefits immediately. This allows the other spouse to file for spousal benefits.
This strategy has, however, been suspended; hence anyone who suspends their benefits after April 2016 will end up making their benefits unavailable to their spouse.
• Deemed Filing Rules
In filing for Social Security retirement benefits, you should be filing for both your benefit and your spouse, and you will get the higher of the two.
For people born on or before Jan. 1, 1954, and you are at full retirement age or older, you can indicate on your application that it is a restricted application. You can now decide whether to claim your benefit or your spousal benefit.
At age 60 or above, any widow or widower can use a restricted application. You can, however, restrict application if you are neither a widow nor widower provided:
Before getting to your full retirement age, a restricted application will be useless in expressing your desire to file for a spousal benefit
For people born on Jan. 1, 1954, or before, they can use a restricted application after reaching their FRA to limit their application to spousal benefits only. With this, they can later switch to their benefits.
For people born on Jan. 2, 1954, or after, when filing for benefits, it will be assumed that you are filing for all your benefits. You would be entitled to the lion's share of the benefits (yours or your spouse) if your spouse filed already.
If your spouse files after you, when he/she files, they will employ the deemed filing rule. This will qualify you for a spousal benefit.
Many people are confused when they are older than their spouse, and they filed already before you. If the younger spouse files at age 61, the spousal benefit will not be available since the older spouse is yet to file. The younger file, however, gets its benefits.
As soon as the older spouse request for the benefits, the younger spouse already qualifies for the spousal benefit. Since the younger spouse, however, filed before getting to their FRA, the way of calculating the spousal benefits differs.
• Excess Spousal or Supplemental Spousal Benefit
Ideally, the spousal benefit is half the amount of spouse FRA benefit. This amount is usually lower if the spouse making a claim is filing earlier. Should any of the spouse be receiving the benefits and becomes qualified for a spousal benefit, there is a strategy to determine what they will receive a spousal benefit.
Let us work with two couples, a younger one at age 61 with a primary insurance amount (PIA)of $900. Since she filed early, however, she received $700 per month. Her claim will be reduced since she claimed before her FRA. The older spouse, age 67, has a PIA of $2150.
Divide the older spouse's PIA and cut into half, then subtract the younger spouse's PIA. We have $2,150/2= $1,075 -$700 = $375.
If the older spouse files for benefits and qualifies for a spousal benefit, the $375 will be added to what she is currently getting. As a result, her monthly benefit will rise from $700 to $1075.
Flynn Financial Group Inc