Why Does Your Software Show My Wife Getting A Spousal Rate Of Zero?

Feb 24 2020 - 3:48pm

I have your MaxSS software but am confused why it returns a $0 spousal benefit for my wife.

I turn 70 this April and will be starting my SS benefit that month. Wife turns 63 this October and is retiring from public school teaching this May with a school pension. She also has ten years significant prior SS earnings.

Per my understanding, her spousal benefit is 50% of my SS [$3851/2=$1790.50] and her GPO is 2/3 of her school pension [2/3*$1807=$1204.71] yielding a spousal benefit after GPO of $585.79 [$1790.50-$1204.71]. Her latest SSA statement estimates her FRA benefit (4/2024) to be $827.

The MaxSS software calculates her WEP discounted benefit @63 to be $299.33 but $0 for spousal benefit. I was thinking $586. My understanding is that WEP would never take a beneficiary to $0 yet that is what it appears that MaxSS calculates. I'm sure I've missed something but I'm still confused.

Also, another source of confusion reading all the material on spousal, WEP and GPO is the term "spousal". Both wife and I are spouses. So when the text says spouse or spousal, I don't know if that means wife or me. That's probably where I've gone wrong with my math.

Thanks for clearing this up for me.

Hi,

I'll start out by explaining that although I answer the questions submitted to this forum, I do not have access to our software customers' data. Therefore, you'll probably want to resubmit your question using an online contact form from the help menu so that you can received a personalized response from one of our experts with access to your data.

I think I can clarify some general things for you, though. First off, spousal benefits refer to auxiliary benefits that are paid based on a worker's earnings history to their spouse. So, if your wife files for benefits from your work record she'd be filing for a spousal benefit.

Spousal benefits are calculated based on 50% of the primary insurance amount (PIA) of the worker on whose record the spouse is filing, which could be different than the worker's benefit rate. A worker's PIA is equal to the amount of their Social Security retirement benefit if they start drawing a full retirement age (FRA). You're apparently basing your calculations on the presumption that your wife could draw up to 50% of your full age 70 rate, which is incorrect.

Also, since your wife was born after January 1 1954, she couldn't file for spousal benefits without also filing at the same time for her own Social Security retirement benefits. As a result, she could only potentially qualify for a partial, or excess, spousal benefit. Her unreduced excess spousal benefit amount would be calculated by subtracting her own PIA from 50% of your PIA. And, both her own retirement benefit rate and her excess spousal rate would be reduced for age if she starts drawing prior to FRA.

For example, say Dana files for benefits at age 63. Dana's PIA would normally be $800, but because she's receiving a teachers' pension her PIA is reduced to $388 due to the Windfall Elimination Provision (WEP). And, since Dana is filing at age 63 her benefit rate is reduced for age to $300. Dana's husband started drawing his benefits at age 70 and receives a benefit rate of $3828, or 32% more than his PIA of $2900.

If Dana files for an excess spousal benefit, her unreduced spousal rate would be calculated by subtracting her PIA ($388) from 50% of her husband's PIA ($2900/2 = $1450), which would result in a rate of $1062. However, since Dana Is only age 63 her excess spousal rate would be reduced to $770. And, since she's receiving a teachers' pension, 2/3rds of her pension amount would be subtracted from her excess spousal rate because of the Government Pension Offset (GPO) provision. Therefore, if Dana's teachers' pension amounts to $1155 or more, her excess spousal rate would be reduced to zero (i.e. (2/3 x $1155) - $770 = 0).

Best, Jerry