I plan to wait to age 70 to begin Social Security. At that time my wife will reach her FRA as well and we plan to begin her Spousal benefit (50% of my FRA benefit) as well, which would be more than her retirement benefit. She is 62 and has credits for a small retirement benefit of her own which would be several hundred dollars a month if started now (with the early benefit penalty). If we were to start her benefits early, then begin spousal benefits when she reaches FRA would the Spousal benefit be reduced based on having started her work benefit early? While the benefit would be relatively small, starting it now seems the right thing to do if it doesn’t reduce her spousal benefit.

Hi. Your wife's spousal rate won't be reduced as long as she doesn't receive spousal benefits prior to her full retirement age (FRA). However, filing for her own benefits early and then switching to spousal benefits isn't permitted. If your wife files for her own benefits prior to FRA, the resulting reduction in her benefit rate will continue for as long as both of you are living. Any spousal benefits for which she later qualifies would be paid in addition to her own benefit rate.

For example, say Joy files for her Social Security retirement benefits at age 62. Joy's PIA, which is equal to the amount she'd be eligible for if she started drawing her benefits at FRA, is $600. But, Joy's benefit rate is reduced for age to $422 because she's claiming her benefits at age 62. Several years later Joy's spouse applies for his benefits, and his PIA is $2000. Joy's unreduced excess spousal benefit would then be calculated by subtracting her PIA from 50% of her husband's PIA, which in Joy's case amounts to $400 (i.e. $2000/2 - $600). If Joy is at least FRA when she becomes eligible for her excess spousal benefit, she would then be paid the full unreduced excess spousal amount of $400 in addition to her own reduced rate of $422 to give her a combined rate of $822. But, if Joy's husband starts drawing his benefits before Joy reaches FRA, her spousal rate would also be reduced for age.

It sounds like you and your wife should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze all of your various options so that you can determine the best overall strategy for maximizing your benefits.

Best, Jerry