How Are Social Security Spousal Benefits Calculated?

To understand Social Security benefit calculations, you first need to understand one piece of jargon: "primary insurance amount" (PIA). A person's primary insurance amount is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.

A Social Security spousal benefit is calculated as 50% of the other spouse's PIA. Note that the age at which the other spouse files for Social Security benefits doesn't affect this calculation.

Example: Jane files for her retirement benefit at age 63 and is therefore receiving a retirement benefit that is smaller than her PIA. Jane's husband Bob files for a benefit as Jane's spouse. Bob's spousal benefit will initially be calculated as 50% of Jane's PIA. (Key point being: it's 50% of Jane's PIA, rather than 50% of what she's actually receiving.)

If Jane had filed for retirement benefits after her full retirement age (and were therefore receiving an amount larger than her PIA), Bob's benefit as Jane's spouse would still be calculated as 50% of Jane's PIA. Again, the age at which Jane files for retirement benefits does not affect the amount that Bob can receive as Jane's spouse.

Complicating Factors: Spousal Benefit Reductions

An assortment of other factors can come into play, which could reduce your benefit as a spouse. For example:

  • If you are receiving a retirement benefit of your own, your spousal benefit will be reduced.
  • If you file for spousal benefits prior to your full retirement age, your spousal benefit will be reduced.
  • If you are receiving a government pension from work that wasn't covered by Social Security taxes, your spousal benefit will be reduced by the "government pension offset."
  • If your spouse is disabled or if you have a minor child or adult disabled child, the family maximum rules may result in your spousal benefit being reduced.
  • If you are collecting a spousal benefit while under full retirement age and you are working, the earnings test may result in some or all of your spousal benefit being withheld.

We will discuss the GPO, family maximum rules, and earnings test in other articles. For now, we will discuss only the first two potential sources of reduction: entitlement to your own retirement benefit and filing prior to full retirement age.

Spousal Benefit Reduction Due to Own Retirement Benefit

If you are receiving a retirement benefit of your own, your benefit as a spouse will be reduced by the greater of:

  1. your PIA or
  2. your monthly retirement benefit.

Example: In addition to receiving a benefit as Jane's spouse, Bob is also receiving a retirement benefit of his own. Because he is entitled to a retirement benefit of his own, he will not receive the full spousal benefit (i.e., 50% of Jane's PIA). Instead, his spousal benefit will be reduced by the greater of a) his own PIA or b) his monthly retirement benefit.

Spousal Benefit Reduction Due to Early Entitlement

If you file for a spousal benefit prior to your full retirement age, that spousal benefit will be reduced due to early filing. The reduction is 25/36 of 1% for each month early, up to 36 months. For each month in excess of 36 months, the reduction is 5/12 of 1%.

Example (continued): Bob's full retirement age is 67. Bob files for his retirement and spousal benefits at age 65 (i.e., 24 months early). As a result, his spousal benefit will be reduced by [24 x 25/36 of 1%] -- or 16.67%.

The final calculation of Bob's spousal benefit will be 83.33% x (50% of Jane's PIA, minus Bob's PIA). And to that, we would add Bob's own retirement benefit to find the total amount of his monthly benefit.


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Social Security coverTopics Covered in the Book:
  • How retirement benefits, spousal benefits, and widow(er) benefits are calculated,
  • How to decide the best age to claim your benefit,
  • How Social Security benefits are taxed and how that affects tax planning,
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