Which Numbers Are Used To Calculate Spousal Benefits?

Today’s column addresses questions about how spousal benefit rates are calculated, whether it’s possible to reapply to increase benefits and whether early spousal benefits would reduce later survivor’s benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc, which markets Maximize My Social Security and MaxiFi Planner.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Which Numbers Are Used To Calculate Spousal Benefits?

Hi Larry, Are the primary insurance amounts (PIAs) used to determine spousal benefit eligibility set and frozen or are they indexed? For example, if the lower paid spouse begins taking their retirement benefits at 63 1/2 and the higher paid spouse is two years older and wants to delay taking their retirement benefits until the lower paid spouse reaches their FRA of 66 and four months, which year’s PIAs are used?

When comparing the PIAs, are they the PIAs from when the higher earner reached FRA two years earlier or from the year the PIAs are compared? Thanks, Set

Hi Seth, PIAs can increase due to a person’s additional earnings or because of cost of living increases (COLAs). In your example, the initial spousal benefit rate would be calculated based on the couple’s current PIAs at the time that the higher earner starts drawing their benefits.

However, the lower earning spouse wouldn’t end up with a full 50% of their spouse’s PIA if they starts drawing their own benefits prior to their full retirement age (FRA). Any reduction for age applicable to their own retirement benefit rate would continue even if they later become eligible for spousal benefits

You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — which accurately calculates spousal and other benefits using the relevant PIAs and other information so you can fully analyze your options while determining your best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Is It True That You Can Somehow Reapply To Get Your Benefits Increased?

Hi Larry, I started getting my Social Security retirement benefits when I retired at 62. I will be 68 in December. Is it true I can somehow “reapply” to get my benefits increased since I am now six years older? Thanks, Car

Hi Carl, If you start drawing benefits prior to your full retirement age (FRA), the reduction for age applied to your benefit rate is permanent. Social Security does allow people to withdraw a claim for retirement benefits and reapply later, but only if they repay all of the benefits they’ve been paid and if they file the withdrawal request within 12 months of when they originally started drawing benefits.

The only way that you could increase your benefit rate is to work and earn more than you did in one of 35 highest earnings years that were used to compute your current benefit rate or if you voluntarily suspend your benefits between now and age 70 to earn delayed retirement credits (DRCs). Best, Larry

Will My Wife’s Survivor Benefit Be Affected If She Takes Spousal Benefits At 65?

Hi Larry, I’m 68 and taking my retirement benefits, which I started at FRA. My wife is 64 and earned her own Social Security retirement benefit but her spousal benefit would be much higher. If she outlives me, will her future survivor benefit be affected if she takes her spousal benefit at 65?

I know her spousal benefit will be reduced but I don’t know if her future survivor benefit will also be reduced. Thanks, Marti

Hi Martin, Widow(er)’s benefits are calculated independently based on the recipient’s age at the time they start drawing survivor’s benefits. Any reduction for age that applied to the widow(er)’s own retirement benefit rate or their spousal rate would not carry over to their benefit rate as a survivor

So regardless of when your wife starts drawing her spousal benefits, her survivor rate would be unreduced as long as she doesn’t start drawing those benefits prior to her full retirement age (FRA). Best, Larry

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