How Are Reduced Spousal Benefits Calculated?

Jan 14 2017 - 7:30am

Hello Larry et al. Just when I think I might have this social security thing figured out I read something that makes me question everything I "know". I certainly intend to purchase your software but wanted to follow-up on a response you provided to a question asked back in July 2016 (entire question and response provided is below -- I added names for clarity). That question mirrors the one I have except for the spousal reaching her FRA. In that question John had filed for his regular retirement at 62 and Mary had just reached her FRA. The response correctly stated that Mary's spousal benefit would be 50% of John's PIA at John's FRA (even though John filed early at 62) as opposed to what he's drawing now.

But what if Mary had not yet reached her FRA? What if Mary was 63 or 64 and wanted to start drawing a spousal benefit? Would her benefit still be based on John's full PIA at FRA . . . or a reduced PIA? I know Mary's benefit would be reduced because she had not yet reached her FRA but I thought a read on there would be a further reduction and based on John's PIA at age 62.

Let me put specifics to my question using my own circumstance:

My wife and I are both 60. My PIA at FRA (66 1/2) is $1610. My wife's is $504. If I elect to file for regular retirement at 62 my PIA will be reduced to $1173 (5/9ths of 1% for the first 36 months and 5/12ths of 1% for each month thereafter).

Here's where I'm confused. From what I read at it's my understanding my wife's spousal benefit would be based on my reduced PIA of $1173, and then, because she has not yet reached her FRA, further reduced (25/36 of 1% per month for the first 36 months and 5/12 of 1% for each additional month). This winds up being a spousal benefit $398. Is this correct? Will her reduction for taking a spousal benefit shy of reaching FRA be based on my reduced PIA at 62 or my PIA at FRA?

Sorry for being so wordy and thanks for this. Your columns are a godsend to the masses struggling to understand how social security works.



Original Question:

How Are Spousal Benefits Calculated?
Spousal Benefits
Jun 27 2016 - 5:45pm


I (am John) and (I'm) 71 and my wife (Mary) is 66. I have been collecting regular SSA at the reduced rate of course since 62. Mary still works and she does not collect. It appears that her spousal benefit is 50 percent of what my benefit would have been had I waited to collect at 66 as opposed to half of what I actually get. Is this correct? What is the logic?


Yes, unreduced spousal benefits are equal to 50% of the worker's full retirement age benefit (PIA). The logic is that if a spouse waits until FRA to file, he or she should not be penalized simply because their spouse chose to take reduced benefits. If spousal benefits are taken before FRA, they are reduced independently from the worker's reduction, based on the spouse's age at the time they start the spousal benefit.

Unfortunately, the same logic does not apply to widow(er)'s benefits. So, if you die first, your wife's potential widow's benefit will be limited to 82.5% of your PIA because you chose to receive benefits at age 62. That won't matter, though, if the benefit amount she gets on her own record is higher than the potential widow's benefit. In that case, she'll simply keep getting her own benefit.

On the other hand, if your wife dies first, your potential widower's benefit would be her full rate, including any delayed retirement credits she earns before switching to her own account. I'm assuming that she filed just for spousal benefits at age 66, and plans to switch to a higher benefit on her own account at age 70.

Best, Jerry

Hi Matt,

I'll explain the calculation using your figures (i.e. your PIA = $1610, wife's PIA = $504) and assuming that your full retirement ages are 66 1/2.

If you start benefits at age 62, your rate would be reduced by roughly 27%, or to about $1173 as you noted. That would not directly affect the calculation of your wife's benefit, however. If she starts drawing when she's age 62, and assuming that you're also drawing your benefits, her unreduced spousal benefit rate would be calculated as follows:
1) 50% of your PIA = $805
2) $805 - her own PIA of $504 = $301.

Her own unreduced rate (i.e. $504) would then be reduced by roughly 27%, or to about $367. Her excess spousal benefit (i.e. $301) would be reduced by roughly 32% to about $204. The 2 benefits would then be added together for a combined rate of about $571.

Best, Jerry