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Can You Provide Any Guidance On Our Scenario?

I subscribed to Maximize for several years as I planned our social security strategy. This year we reached the final stage of our strategy based on your recommendations and something doesn’t seem quite right.

My spouse, the lower wage earner, started her benefit when she was 62 1/2 as recommended by your software. I qualified for the restricted application and claimed a portion of her benefit after I reached FRA earlier this year. When she reached FRA at 66 and 2 months, I decided to start my benefit at age 69 based on my earnings record. We then switched my wife to claim spousal benefits off my record.

The discrepancy comes into play now where my spouses benefit is less than the Maximize software projected. SSA claims since she started her benefit early (62+) her spousal benefit off my record is also reduced even though she waited until she reached FRA and I was well beyond my FRA. I cannot find where this rule is documented and it seems to diverge from what the Maximize software was projecting, by a few hundred dollars a month less.

Can you provide any guidance on this scenario? Thanks so much!

Hi. I answer questions submitted via this forum, but I don't have access to our software subscriber's data or results.
If you're a subscriber, you should submit questions using an online contact form in the help menu so that one of our experts with access to your data can respond.

I can tell you that in the scenario you describe your wife would not be due a full 50% of your primary insurance amount (PIA) if that's what you were expecting. Your wife's excess spousal rate would be unreduced if she didn't start drawing spousal benefits until she was full retirement age (FRA), but her own retirement benefit rate would continue to be reduced for age since she started drawing those benefits prior to her FRA.

Once a person files for their own Social Security retirement benefits, those benefits continue for life. If the person subsequently qualifies for a higher spousal rate they are paid a partial, or excess, spousal benefit in addition to their own benefit. You can't file for your own benefits early and then switch to an unreduced spousal benefit later. This rule is covered in the following section of Social Security's operations manual:

Here's an example to clarify: Let's say Mary files for her Social Security retirement benefits at age 62. Mary's PIA is $800, but Mary's benefit rate is reduced for age to $563. Several years later Mary's husband applies for his benefits, and his PIA is $2000. Mary's unreduced excess spousal benefit would then be calculated by subtracting her PIA from 50% of her husband's PIA, which in Mary's case amounts to $200 (i.e. $2000/2 - $800). If Mary is at least full retirement age (FRA) when she becomes eligible for the spousal benefit, she would then be paid the unreduced excess spousal amount of $200 in addition to her own reduced rate of $563 to give her a combined rate of $763. But, if Mary becomes eligible for spousal benefits prior to FRA, her spousal rate would also be reduced for age.

Our software (( is fully programmed to accurately handle computations involving reduced retirement and excess spousal benefits, so the benefit estimates you were given should have been accurate.

Best, Jerry

Dec 22 2021 - 11:55am
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