ROBERT POWELL, CFP| September 14, 2021; Retirement Daily| On the Street
A reader would like to determine what his wife’s benefit will be since she’s claiming on his work record. He claimed Social Security early – how does that impact his wife? Adviser Joe Alfonso explains.
I would like to estimate my spouse’s benefit amount. She will be collecting on my work history as she does not have 40 credits of work. The benefit estimator on mySSA says to enter my Primary Insurance Amount from my Full Retirement Age but I started collecting benefits at 62 years and 2months. Is my current benefit amount used in this equation instead? I am currently 65 and my wife recently turned 62.
The PIA refers to the full retirement benefit to which one is entitled if they begin taking it at their full retirement age (FRA), explains Joseph Alfonso, CFP®, founder and principal at Aegis Financial Advisory.
If your spouse begins taking a spousal benefit based on your work record at her FRA (66 years and 10 months), she will receive 50% of the PIA that you were entitled to. “It does not matter that you started your benefit early and are receiving a reduced retirement benefit,” he says. “Your spouse’s spousal benefit will still be based on your PIA.”
Alfonso outlines the math: “You state that you began your retirement benefit at age 62 and 2 months and that you were born in 1956 (age 65). That means that your FRA was 66 years and 4 months. You therefore began your benefit 4 years and 2 months early. That translates into a benefit reduction of approximately 26%. In other words, the benefit you are receiving is 74% of your PIA. If you divide your current monthly benefit by 74% you can back into your PIA. Take half of that and that is the spousal benefit your wife will receive at her FRA.”
Current retirement benefit: $1,000 (started at age 62 and 2 months)
Net Benefit after reduction: 74% (less 26% reduction)
PIA calculation: $1,000/0.74 = $1,351
Spousal benefit at FRA: $1,351 * 50% = $676
“Note that if your spouse begins taking a spousal benefit before her FRA, her benefit will be reduced,” he adds. “Given your spouse’s FRA (66 years and 10 months), if she were to begin her spousal benefit now (at age 62), it will be reduced to approximately 34% of your PIA.”
This chart shows the benefit reduction by FRA for beneficiaries claiming at age 62.