Can You Shed Some Light On This?

Dec 31 2018 - 12:17pm

Hello Mr. Kotlikoff,
I retired June 2015 and my wife and I moved to the Czech Republic to be closer to our daughters. My wife can begin received spousal benefits at age 62, in 2020. I was told while we were still in the US that she would receive 35% of my benefit at that time when she turns 62. Then recently I discovered on the Social Security site that her percentage is to be 33.3%. To further complicate matters I saw somewhere on the Social Security site that she will only get 50% of that. It is so confusing. Can you shed some light on this matter for us? Thank you so much for any help you can provide.


I'll try. First of all, you need to understand how spousal benefits are computed. Assuming that the spouse does not also qualify for any other types of Social Security benefits, their unreduced spousal benefit rate would be equal to 50% of the worker's primary insurance amount (PIA). And, the PIA is the amount that a worker receives if they start drawing their Social Security retirement benefits at their full retirement age (FRA).

Therefore, if a worker and their spouse start drawing their respective Social Security retirement and spousal benefits beginning with the month that each of them reaches FRA, the spouse would receive 50% of the amount that the worker receives. However, if either the worker or spouse chooses to take start drawing their benefits prior to FRA their benefit rate is reduced for age. But, the any such reduction only applies only to specific benefit involved, so a spousal benefit would not be reduced simply because the worker chose to start drawing their benefits early. And, to complicate matters further, the reduction percentage applicable to retirement benefits based on a person's own work history is different from the reduction percentage applied to spousal benefits.

Since your wife was apparently born in 1958, the reduction percentage that would be applied to her benefit rate if she chooses to start drawing spousal benefits at age 62 would be roughly 33.3%. So, for example, if your PIA was $2000, your wife could potentially get a spousal benefit of $1000 if she waits until her FRA of 66 & 8 months to start drawing. But, if she starts drawing at age 62 instead, her $1000 in this example would be reduced to roughly $666.

You and your wife may want to strongly consider using our software to explore and compare your options so the you can choose the best possible strategy for claiming your benefits.

Best, Jerry