Is spousal benefit based on the other spouse’s benefit amount at FRA, or on the other spouse’s benefit amount at the time the spousal benefit is claimed? My husband started collecting SS when he was 62. I plan to keep working and delay filing for myself until I am 70. My retired husband won’t be due any spousal benefit based on my SS account at my FRA, because his current benefit is more than 50% of what my benefit would be at FRA. However, I am entering my highest earning years and plan to delay collecting SS, so my benefit at age 70 will be quite a lot higher. If my husband claims spousal benefit when I reach 70, would it be calculated based on what I was due at FRA (which means he’ll get nothing)? Or would it be based on the expanded amount I will be getting at age 70 (which will get him something)?
Unreduced spousal benefits are based on 50% of their spouse's full retirement age benefit rate, which is otherwise known as their primary insurance amount (PIA). In order for your husband to potentially qualify for additional spousal benefits from your record, your PIA would have to be more than twice as much as his PIA. Note that your husband's PIA would be roughly 25% more than the reduced rate he's now receiving if he started drawing benefits at age 62. So, your PIA would need to be a lot more than twice as much as his reduced benefit rate in order for your husband to potentially qualify for spousal benefits.
For example, say Frank files for his benefits at age 62. Frank's PIA is $1500, but his age 62 rate is $1125. Frank's wife's PIA is $2500, but she waits until age 70 to start drawing her benefits and thus receives a monthly rate of $3300. Even though Frank's wife in this case would be drawing almost 3 times as much as him (i.e. $3300 vs. $1125), he would not qualify for spousal benefits because his PIA of $1500 is more than 50% of his wife's $2500 PIA.
If you were born prior to January 2 1954, you may want to consider filing for spousal benefits only at your full retirement age (FRA) while allowing your own retirement benefit rate to grow until age 70. To determine if that or some other strategy would be optimal in your case, you should strongly consider using our maximization software.