Why Are Early Spousal Benefits Reduced At A Higher Rate?

Jul 17 2016 - 5:45pm

Re: What Happens If My Wife Starts At Age 64? July 16,2016

Why would the reduction on the wife's benefits be greater on the spousal portion of the benefit than her own when they are both started at the same early age?

Hi,

I don't know the reasoning for it, but under Social Security law, early spousal benefits are reduced by a higher percentage than are early retirement benefits on a person's own account. Specifically, for the first 36 months of reduction, early spousal benefit are reduced by 25/36ths of 1%, as opposed to 5/9ths of 1% for early retirement benefits. This results in a 20% reduction if a person takes retirement benefits 3 years prior to full retirement age (FRA), vs. a 25% reduction if a person starts spousal benefit 3 years early. If a person starts benefits more than 3 years early, the reduction assessed for months in excess of 36 is the same for both retirement and spousal benefits (i.e. 5/12ths of 1% per month). For more information, see: https://www.ssa.gov/oact/quickcalc/earlyretire.html.

Best, Jerry