August 2021 Newsletter
From The Certified Elder Law Attorney's Desk:
William W. “Bill” Erhart
Are You Married and About to Retire?
Investigate Applying for a Social Security Spousal Benefit on Your Spouse’s Work Record Before Applying for Your Own Retirement Benefit
DID YOU KNOW that when one spouse retires, the other retiring spouse may be eligible to apply for the Spousal Benefit before they collect their own Retirement Benefit?
The reason why someone would do this is to make more money in the long run.
When someone retires at “full retirement age” and applies for their retirement benefit, they are entitled to a monthly Social Security benefit called a “primary insurance amount”. For persons born from 1943 to 1954, their “full retirement age” is 66. But if that person waits to claim their retirement benefit until age 70, they get a higher benefit that goes up in increments beyond the “primary insurance amount” up to age 70.
Thus, it often behooves someone to wait to claim their retirement benefit until they are age 70 even if they retired sooner.
Example: Husband and younger Wife retire. Both are at least full retirement age (66 for their birth year range), but Husband is 70 while Wife is, say, 67. Husband claims his retirement benefit. But because Wife is younger than 70, it may be beneficial to Wife to wait to claim her retirement benefit until she is age 70. Wife may be able to claim a Spousal Benefit in the interim.
If Wife claims the Spousal Benefit at her full retirement age (66), she is entitled to a Spousal Benefit of 50% of the “primary insurance amount” of Husband. The Spousal Benefit is reduced if Wife retires earlier than her full retirement age.
The catch is, if Wife’s own retirement benefit at her full retirement age is greater than 50% of Husband’s primary insurance amount, Wife cannot claim the Spousal Benefit - and instead she must take her own retirement benefit.
Eligibility requirements for a spouse (in this example, Wife) to receive the Spousal Benefit include:
- Husband must be collecting retirement benefits;
- Wife must be at least age 62 (but she must be at her full retirement age to get the full Spousal Benefit) (Wife can be any age if Wife is caring for a child who is disabled or under 16);
- Husband and Wife have been married for at least one year (other exceptions apply including being natural parents of a child); and
- Wife is not entitled to an old-age or disability benefit based upon a primary insurance amount that is equal to or larger than the full Spousal Benefit. 20 C.F.R. § 404.330.Due diligence means performing a thorough investigation of the small business you are interested in financing. It involves looking at key categories such as profits, losses, debts, legal liabilities, past performance, and future projections. When conducting due diligence, it is important to review the following items:
Be careful with the above rules as a different result may apply for spouses born on or after January 2, 1954.
If you were born before January 2, 1954, are at least full retirement age, and qualify for your own retirement benefits and also a spouse’s (or divorced spouse’s) benefits, you can choose to restrict your application, apply for one of the benefits, and delay applying for the other until a later date.
If you were born on or after January 2, 1954, and qualify for both retirement and spouse’s (or divorced spouse’s) benefits, you must apply for both benefits. This is called “deemed filing.” If you file for one benefit, you are “deemed” to file for the other one, too, even if you don’t become eligible for it until later.
These and other details complicate the analysis.
The point of this newsletter is to educate readers on the possible availability of the Spousal Benefit, and to highlight the value of investigating the Spousal Benefit before claiming one’s own retirement benefit.
We can help.
As you can see, with Social Security retirement benefits, how much you and your spouse get depends largely on what age each of you are when you retire. That and many other factors. The Social Security Administration has charts and formulas. And lots of rules and exceptions.
Why leave money in the government’s hands when you or your spouse may be entitled to it?
If you or your spouse are considering retirement in the next few years, contact us!
We can advise you and your spouse on your different options now, so you can be thinking about it for later.
Call us at 302-651-0113 to schedule a consultation!