Is the PIA that is used for each spouse in computing whether a 50% spousal benefit is greater than the lower spouse's own benefit set once or is it indexed for when the relative computation is made? For example, lower paid spouse begins taking SS benefits based upon their own work history at age 63 1/2. Higher paid spouse is 2 years older and wants to delay taking their SS benefits until lower paid spouse reaches their FRA of 66 and 4 months so as to maximize the spousal benefit, since it will be larger than lower paid spouse's own benefit at that point. For computing 1/2 of higher spouse's PIA, is the PIA used from when he reached FRA 2 years prior (ie is it stuck in time?), or does this value used for the computation get increased by the SS inflation factors over those 2 + years he was waiting for spouse to reach FRA?

Thanks,

Clint

Hi Clint. Primary Insurance Amounts (PIA) can increase due to a person's additional earnings or because of cost of living increases (COLA). In your example, the initial spousal benefit rate would be calculated based on the couple's current PIAs at the time that the husband starts drawing his benefits.

However, the lower earning spouse wouldn't end up with a full 50% of her husband's PIA if she starts drawing her own benefits prior to full retirement age (FRA). Any reduction for age applicable to her own retirement benefit rate would continue even if she later becomes eligible for spousal benefits.

For example, say Mary files for her Social Security retirement benefits at age 62. Mary's PIA is $800, but Mary's benefit rate is reduced for age to $563. Several years later Mary's husband applies for his benefits, and his PIA is $2000. Mary's unreduced excess spousal benefit would then be calculated by subtracting her PIA from 50% of her husband's PIA, which in Mary's case amounts to $200 (i.e. $2000/2 - $800). If Mary is at least full retirement age (FRA) when she becomes eligible for the spousal benefit, she would then be paid the unreduced excess spousal amount of $200 in addition to her own reduced rate of $563 to give her a combined rate of $763. But, if Mary becomes eligible for spousal benefits prior to FRA, her spousal rate would also be reduced for age.

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

Best, Jerry