Thank you very much for your work on Social Security as I have learned a lot thus far. I have one unique question for you. I have a client (DOB 08/18/1952) whom is disabled and starting receiving benefits at 62 for the amount he would have received at age 66 (his FRA). He is turning 66 in August and is going to voluntarily suspend his benefits to allow them to grow until age 70. His wife is currently 65 (DOB 11/07/1952) turning 66 (her FRA) in November. She started her own benefits at age 62 and receives $884 a month. Her FRA benefit at that time was $1200. She hasn't worked since then. If her husband suspends his benefits (Currently $2580 a month) until age 70 what would she receive once he turns back on his payments? Was it a mistake for her to take her benefit at age 62? From my understanding of the formula for spousal benefits they are going to take 50% of her husbands benefit (50% of $2580= 1290) minus her FRA benefit ($1200) and provide her $90 a month extra. Is this correct or will she receive the full $1290? Is the $884 she has received every month since 62 free money or did that screw up her payments forever? Thank you and look forward to your help on this one?
Based on the figures you cite above, the wife in this case would be eligible for an unreduced excess spousal benefit of $90 when her husband starts receiving his benefits. That amount would then be added to her reduced retirement benefit to give her a combined rate of $974 ($884 + $90). She could file for the unreduced excess spousal benefits effective with the month she reaches age 66, but she couldn't be paid any spousal benefits while her husband's benefits are voluntarily suspended.
I can't say that it was necessarily a mistake for the wife in this case to have taken her retirement benefits early, but I certainly wouldn't describe it as 'free money' since she will now be stuck with a reduced benefit rate for as long as both she and her husband are living. The fact that she drew reduced retirement benefits won't adversely affect the rate she could receive as a widow, though.
By the way, I assume that the wife in this case started drawing her retirement benefits prior to the first month of her husband's entitlement to disability benefits (SSDI). If her husband's month of entitlement to SSDI was the same as or earlier than her month of entitlement to retirement benefits, she would have also been deemed to have also applied for spousal benefits and her excess spousal benefit rate would be reduced for age.
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