Reading your book Get What's Your," i learned that my wife's spousal benefit is equal to 1/2 of my FRA benefit. For hers to dominate she would have to take her own by working to 69; where here amount would be greater than 1/2 my FRA. She is 2 years younger than me. If she begins collecting her benefit at 64 (assuming i am collecting) are there income limits on her income or penalties on her collection as she has not reached her FRA ?

Hi,

You might want to consider running the maximization software available on this website in order to clarify your options before making any final decisions. For example, it may be best for her to file for hers at 64 and for you to file for spousal benefits only at full retirement age (FRA). Then you could switch to your own account at age 70, and she could apply for an excess spousal benefit.

To answer your question, though, if your wife files at age 64 and you are already drawing on your account, she'll be deemed to be applying on both records. The benefit on her own account would be reduced by about 13.33%, and her excess spousal benefit would be reduced by about 16.67%.

The only type of income that limits payment of Social Security benefits prior to FRA is earned income, specifically gross wages and net self-employment earnings. If a person earns more than the yearly exempt amount, which is $15720 this year, Social Security (SSA) withholds $1 of benefits for each $2 that the person earns in excess of that amount. In the year that the person reaches FRA, the exempt amount is higher, and SSA only withholds $1 for each $3 of earnings exceeding the exempt amount in months prior to reaching FRA. By the way, the withholding applies to spousal benefits as well, so if she files at age 64 and you file for spousal benefits on her account, your spousal benefits would also be subject to withholding if she earns more than SSA's exempt amount.

Best, Jerry