I have your (revised) book and it is excellent. I have a question about spousal benefits - I am getting conflicting advice.

I was born in 1958 and she was born in 1959. My wife was a homemaker and has a much smaller expected PIA than me, so when I take retirement benefits her spousal benefit will be larger than her regular benefit. I am going to defer taking my retirement benefits until I am age 70 - to maximize my benefit and my surviving spousal (widow) benefit.

We had planned to have her take her retirement benefit early, at age 62 (just to have some income benefit in the intervening 7 years - we don't desperately need the money).. I will not take a spousal benefit on her retirement benefit because I don't want to be deemed. I had expected she could take a retirement benefit on her own record, from age 62 to 69 (this will be an early benefit and reduced accordingly). Then, when I turn 70 and she turns 69, I will take my retirement benefit (with max DRC's) and she will switch from taking her retirement benefit to taking a spousal benefit.

I had expected she could take at age 69 a spousal benefit of 50% of my PIA. However, an advisor has said that if she takes her own retirement benefit early, then when she takes a spousal benefit at age 69, she will also be identified as taking THAT spousal benefit early, with a 25% (or so) haircut.

So that's my question - if my wife takes early retirement benefits on her own record, when she switches to a spousal benefit seven years later at age 69 will she have to take a discount, or will she be 'paid' the full 50% of my PIA?

Thanks so much!!! BD

Hi BD. The short answer is that if your wife starts drawing her own benefits early then she won't receive a full 50% of your primary insurance amount (PIA) when you start drawing your benefits. The reason is that your wife can't actually switch from drawing her own benefits to drawing just spousal benefits. Once a person files for their own Social Security retirement benefits those benefits continue for the rest of their life. If they later become eligible for a higher spousal or survivor benefit they can apply for an excess spousal or survivor benefit, but they can't simply switch to the other benefit.

For example, say Amy files for her own benefits at age 62. Amy's PIA is $500, but she receives a reduced rate of $375 in return for starting her benefits early. Seven years later, Amy's husband files for his benefits and his PIA is $2500. Amy's excess spousal rate would be calculated by subtracting her PIA from 50% of her husband's PIA, which in Amy's case is $750 (i.e. $2500/2 - $500). Amy's excess spousal benefit is not reduced for age because she's over her full retirement age (FRA) when she starts drawing that benefit, but her own benefit rate stays at the reduced rate of $375. So, her combined benefit amount would be $1125, which is less than 50% of her husband's PIA.

The good news is that even if your wife starts drawing her own benefits early she can still get 100% of your benefit rate as a widow if she's at least FRA when she starts drawing widow's benefits. So, if you wait until age 70 to start drawing your benefits your wife could get your full age 70 rate as a widow even if she starts drawing her own benefits early. She wouldn't get both her own benefit amount and your amount, though, just the higher of the two.

You may want to strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze the options available to you and your wife in order to determine your best strategy for maximizing your benefits.

Best, Jerry