Hi Larry, My question is regarding spousal benefit calculations. I have a pretty good handle on the calcualation itself and how it works my question is how is the PIA figured on the higher earner if they haven't retired yet and the spouse is looking to file for spousal benefits when they do. Is the PIA figured in current dollars or future dollars when the person actually is 67 ?

Hi. I'm not sure if I understand your question. A spouse can't be paid spousal benefits unless their spouse is drawing their own Social Security retirement or disability benefits. And, the initial spousal benefit rate is calculated based on the worker's primary insurance amount (PIA) at the time that the claim for spousal benefits is filed.

A person's PIA is equal to their Social Security retirement benefit rate if they start drawing at full retirement age (FRA), The PIA is calculated based on on an average of the person's highest 35 years of Social Security covered wage-indexed earnings. PIAs can be recalculated following any year in which they have higher earnings than they did in one of their previous highest 35 earnings years, and PIAs are updated to include all Social Security cost of living (COLA) increases that occur after they turn age 62.

Unreduced spousal benefits are calculated based on 50% of the worker's PIA, even if the worker starts drawing their benefits early. However, to get an unreduced spousal benefit the spouse would have to start drawing spousal benefits at FRA or later. If the spouse is also eligible for their own benefits, their unreduced excess spousal amount is calculated by subtracting their own PIA from 50% of their spouse's PIA. The earliest that spousal benefits can be paid is the first month that the worker becomes entitled to (i.e. starts drawing) Social Security retirement or disability benefits.

For example, say Bob starts drawing his Social Security retirement benefits this year at age 62. Bob's PIA is $2000, but his benefit rate is reduced for age to $1425. Bob's wife, Amy, is 6 years older than him and she started drawing her retirement benefits at age 62. Amy's current PIA in 2021 is $800, and her current reduced benefit rate is $603. Amy's excess spousal rate is then calculated by subtracting her PIA from 50% of Bob's PIA, which in her case is $200 (i.e. $2000/2 - $800). The excess spousal rate is not reduced for age because Amy is already FRA when she becomes eligible for spousal benefits. Amy's excess spousal benefit is then paid in addition to her own reduced benefit rate to give her a combined benefit amount of $803 (i.e. $603 + $200)

Best, Jerry