Ask Larry

What PIA Is Used In Calculating A Spousal Benefit?

What is PIA used in calculating Spousal Benefit?
That is Spousal Benefit = Larger of (Spouse Own work Benefit ) vs (1/2 of PIA of primary worker)

1)Is PIA always SS amount at FRA or
2)is it the SS amount when Primary Worker takes Social Security Benefit (Say 3 years after FRA) or
3) is it the current SS amount given to Primary worker?

Does PIA increases with COLA adjustment every year?

Hi. The PIA used to calculate spousal benefits is the worker's PIA at the time the spousal claim is filed. In other words, the PIA adjusted for any applicable COLAs and/or recomputations. If the person filing for spousal benefits is eligible for their own Social Security benefits, then their unreduced spousal rate is calculated by subtracting their own current PIA from 50% of the worker's current PIA.

A person's primary insurance amount (PIA) is the benefit rate (before rounding down to next lower whole dollar) they would receive if they elect to begin receiving retirement benefits at their full retirement age (FRA). If a person becomes entitled to Social Security disability (SSDI) benefits prior to FRA, their undreduced SSDI benefit rate is also equal to their PIA. Or, if a person dies prior to reaching FRA, their PIA is the base amount from which survivor benefits are calculated.

If a person lives at least until age 62, or if they die or become entitled to SSDI benefits after reaching age 62, then their PIA is calculated based on their highest 35 years of Social Security covered wage-indexed earnings ( Fewer earnings years are used to calculate the PIA of someone who dies or qualifies for SSDI benefits prior to the year they reach age 62.

Once initially calculated, PIAs can be recalculated if the person has additional years of earnings that are higher than one or more of the 35 years previously used to calculate their PIA. PIAs are also adjusted to include all cost of living (COLA) increases that occur after they reach age 62, or after they become entitled to SSDI benefits or die.

Any applicable delayed retirement credits (DRC) increases are paid in addition to the person's PIA. For example, let's say Bill's PIA at his FRA of 67 is $1800, but Bill decides to wait until age 70 to claim his benefits. When Bill claims his benefits at age 70, his PIA has risen to $2000 due to recomputations and COLAs. Three years of DRCs would add an additional 24% (i.e. 8% per year) to Bill's benefit rate, giving him a benefit amount of $2480 (i.e. PIA of $2000 x 1.24).

Best, Jerry

Apr 21 2022 - 4:37pm
MaxiFi software running on a laptop
Get What's Yours!
Discover tens of thousands in extra retirement dollars with Maximize My Social Security software!
  • Find your maximized strategy
  • Unlimited what-ifs
  • Step-by-Step filing instructions
  • Our software's lifetime-benefit increase for an illustrative couple earning $65K each and planning to take retirement benefits at 62.

    Results will differ based on your specific case and filing strategy.

Getting Started is Easy
Web-based software. Works on ALL browsers. No download.