Would The Earnings Of A Person Receiving Spousal Benefits Before FRA Affect Their Payments?

Dec 18 2018 - 12:42pm

Does the earnings of the person receiving spousal benefit affect the spousal benefit if both husband and wife are under FRA?


Yes, if you receive spousal benefits and you're under full retirement age (FRA) and you work and earn more than the exempt amount allowed by Social Security's earnings test (https://www.ssa.gov/planners/retire/whileworking.html), your spousal benefits would be subject to full or partial withholding depending on the amount that you earn. And, if the worker on whose record you receive spousal benefits is also working and under FRA, part or all of your spousal benefits could be withheld if your spouse earns too much.

For example, say Bob files for his Social Security benefits at age 62 in January 2018. Bob's wife Jane is also age 62, and she qualifies only for spousal benefits on Bob's record because she isn't eligible for Social Security benefits based on her own work record. Bob's reduced retirement rate at age 62 is $1800, and Jane's reduced spousal rate is $840, but both Bob and Jane are still working and will earn $27,600 each in 2018. Here is how the earnings test math would work in Bob & Jane's case:

The earnings test exempt amount in 2018 is $17040, so Bob's and Jane's excess earnings would be $10560 each (i.e. $26740 - $17040). The amount of benefits required to be withheld would be half of that amount, or $5280 each. Social Security would start by withholding both Bob's and Jane's full payment rates starting with January, and they would apply their combined benefit rates of $2640 (i.e. $1800 + $840) to recovering Bob's excess amount. Thus, it would take 2 months to recover the $5280 required by Bob's excess earnings. Bob could then be paid his full monthly payment of $1800 from March through December 2018.

However, the $5280 required to be withheld based on Jane's excess earnings would then be recovered by withholding her full monthly payment of $840 starting in March. Since it would take 6 full months plus a partial month at Jane's spousal rate to recover the $5280 needed, Jane's payments for March through September would be withheld and she would be paid her full monthly spousal rate of $840 for October through December 2018. Jane would also be paid a partial check for September 2018 after the year is over and her 2018 earning are verified.

Best, Jerry