My wife and i are both 62,i being about 8 months older. After readng your excellent book, Get What's Yours, I am planning to work and hold off applying for benefits at least till 66 or and proably 70.
If my wife, who is not working and was the lower wage earner, applies for retirement benefits at 62, on her own record, will she be deemed to have applied for a spousal benefit as well and then get a reduced spousal benefit? The reduced spousal benefit is more than the reduced benefit on her own record. I want her to receive retirement benefits now as long it does not affect her spousal benefit when I apply for retirement benefits. Thank you for your reply.
Assuming that your wife was born after January 1 1954, her application for retirement benefits will be deemed to also be an application for spousal benefits as soon as she becomes eligible for them.
Let me explain with an example. Say your wife has a full retirement age benefit amount (PIA) of $500, but she starts drawing reduced benefits at age 62. Her benefit rate would be reduced by around 25%, or to about $375. She would not be eligible for any additional spousal benefits on your record, at least until you apply for your benefits.
When you do apply for your benefits, Social Security will determine if your wife is eligible for any additional spousal benefits on your record. Her excess spousal benefits, if any, will be calculated starting with 50% of your full retirement age benefit amount (PIA), then subtracting your wife's PIA. So, continuing our example from above, if your PIA was $2000, your wife's unreduced excess spousal benefit would be $500 (i.e. $2000/2 - $500). If she's under full retirement age (FRA) when she becomes eligible for the excess spousal benefit, the amount would be reduced based on her age at the time it starts. The closer she is to FRA when it starts, the smaller the reduction. But, let's say for our example that she does not become eligible for the excess spousal benefit until she is FRA or older. In our example then, the full $500 unreduced excess spousal benefit would then be added to her reduced retirement benefit of $375, making her total benefit rate $875.
So, the bottom line is that if your wife files for reduced benefits on her own account, it won't necessarily affect the amount of her excess spousal benefit, but she will be stuck with the reduction amount that she takes on her own record.
Before making any filing decisions, you and your wife may wish to consider running the maximization software available on this website.