Social Security Spousal Benefits: The Complete Guide

hey everyone in today's video we're talking about one of the most generous benefits available to retirees spousal benefits from Social Security if you understand these rules it could make a big difference in the amount of benefits you receive so stay tuned hey I'm Devin on this channel I break down Social Security and make it easy to understand if you want to understand these rules then use them to your advantage this channel is for you so be sure to subscribe and click that notifications veil so you won't miss anything and oh hitting that like button is always greatly appreciated so let's jump into this according to the Social Security Administration there are two point three million people receiving part or all of their benefit as a spouse of an entitled worker now some of these spouses don't have any work history but are married to an eligible spouse and others have benefit to their own but they're eligible to receive a higher benefit because of their spousal benefit amount was greater than their own benefit from their own work history again in my opinion spousal benefits are the most generous benefit available from the Social Security Administration because you don't even have to do any work to receive them you simply have to be married to an eligible spouse now at face value these spousal benefits seem pretty easy to understand but once you dig in there are a lot of nuances that can lead someone to getting a smaller benefit than they are entitled to receive so in this video I want to break down this topic into three separate sections I'll discuss what a spousal benefit is what it takes to qualify for spousal benefits and then I'll cover how to calculate spousal benefits fair warning this may be a longer video than most of the videos I published but there's no fluff in this you need to understand everything in this video I took out all of the material that was extra or didn't really add good value you don't have to watch all this video at one time though in the description off timestamp the topics so you can either watch this in segments or you can come back and revisit specific areas as needed so in the most simplified form possible a spousal benefit is defined as the highest of your own benefit or up to one-half of the higher earning spouse is full retirement age benefit now this is all adjusted for filing age and we'll get to these specifics of the calculation later but you should know that it's not either your own benefit or one half of your higher earning spouse is benefit an individual's benefit is often a combination of a spousal benefit and your own benefit so let's walk through a quick example to illustrate this now it's important to remember that the Social Security ministration rules are gender-neutral so the scenarios that we discuss here are gonna work either way so let's look at two scenarios one where there is only one spouse who qualifies for their own benefit and another where both spouses qualify for a benefit so first let's take a couple who has the following benefits the husband has a benefit at full retirement age of $2000 since the wife never earned the required 40 credits she does not have a benefit of her own however as long as she meets the eligibility she could receive a spousal benefit of one-half of her husband's $2,000 at her full retirement age so she'd be eligible for a benefit of $1,000 now this next scenario sounds very similar but I want you to pay attention because there's a slight nuance here that will matter when it comes time to calculate these benefits so let's assume again that the husband has a full retirement age benefit of $2,000 this time the wife has her own benefit of $800 now remember at for retirement age the lower earning spouse can get the greater of his or her own benefit or one-half of the higher earning spouse as benefit so in this case the wife is still eligible for a total benefit of $1,000 but she'll receive her own benefit of $800 fer and then a spousal top-off of 200 to get her to that full thousand she's eligible for these are two separate benefits all rolled into one however they are separate if you file early they are reduced on a different rate if you filed after full retirement age one is increased and the other is not but don't worry we're gonna cover all of that and get into the weeds on the specifics of those calculations so let's talk about what it takes to qualify for spousal benefits you can qualify for benefits from a current spouse or an ex spouse the rules are fairly similar but there are a few differences and I do want to break those down separately so let's talk about qualifying for benefits from your current spouse first as long as you've been married for 12 consecutive minds you can qualify for a spousal benefit now there are two exceptions to that 12-month rule the first is if you marry someone who is the mother or father of your natural child and the second is if you were entitled to benefits from another spouse in the month before you were married in either of those cases the 12 month waiting period does not apply one thing to note here is that before you can get a spousal benefit from a current spouse that spouse has to file for his or her own benefit first until they file you'll get all of the amount you have from your own work history another important notation is that the earnings limit applies to these benefits if your spouse is under full retirement age for example if you are receiving a benefit from a spouse and they make more than the income limit their benefit will be stopped and along with their benefit is all benefits paid from their benefit so now let's look at the rules for an ex-spouse this is slightly different and I want to get into these calculations to show you how to do it the right way here you can qualify for a spousal benefit from an ex-spouse as long as you were married at least 10 years and you are not currently married to key differences with the rolls between eligibility from a current spouse versus an ex pal is that with an ex-spouse the higher earning spouse does not have to file first as long as they are 62 and the divorce has been final at least two years so you don't have to wait for that ex-spouse to file before you can get your spousal benefit again as long as that ex-spouse is at least 62 and the divorce has been final for at least two years the second difference is that if your ex spouse earns more than the income limit it will not affect your spousal benefit like it will if you were married these rules are there to keep the higher earning spouse from causing financial harm to the lower earning spouse so now that we know what a spousal benefit is and we know what it takes to qualify let's take a look at how it's calculated right off I want you to know that your own benefit and your spousal benefit are not calculated the same when it comes to reductions for filing early or increases for filing later let me show you what I mean I'm gonna make the assumption that you are the one who'll be receiving spousal benefits here in the center we have your filing age to the left we have the reductions or increases to your own benefit from your work history and to the right we have the reductions or increases to your spousal benefit base just remember this is the base amount which is half of your higher earning spouse --is full retirement age benefit let's also assume that your full retirement age is 67 and that's for anyone who was born in 1960 or later if your year of birth is before that that's okay because here in a minute I'm going to give you the monthly amounts where you can do this calculation on your own so at full retirement age you would receive 100% of your own benefit you would also receive 100% of your spousal amount but if you file a year early at 66 you would receive 93 and a third of your benefit and 90 one and two thirds of your spousal amount at sixty-five it would be eighty six point six six percent of your benefit and 83 and 1/3 of your spousal amount you can see that difference in reductions between your benefit and your spousal benefit continue to widen all the way back to the earliest age of filing age 62 the other notable part of the difference is that your own benefit will increase if you delay filing but your spousal amount will not increase again though I want you to remember that when you're looking at this chart we are showing the reductions to the spousal benefit base amount which is only one half of the higher earning spouse is benefit so just to make sure we are very clear on how a spousal benefit will actually be reduced let me walk you through an example where we use dollars again assuming that the higher earning spouse has a full retirement age benefit of $2000 then we'll take each year of filing eligibility from aides 62 through 67 just remember there's no benefit to delaying beyond full retirement age of 67 it's what we're using here and finally we'll look at how much that spouse would be entitled to in terms of dollars so at 67 you're entitled to 100% of your spousal amount so $1000 at 66 this would decline to 917 dollars and would continue to decrease all the way back to age 62 at which point it would be six hundred and fifty dollars it's interesting to look at the actual percentages here we like to throw around the fifty percent number with a spousal benefit but with the penalties for fouling early this can get reduced all the way down to thirty two and a half percent let's break this down with a few examples to clarify first let's assume again that the higher earner has a full retirement age benefit of $2000 and in this case the spouse does not have a benefit of her own as a spouse she is entitled to the spousal benefit amount of $1000 that's the amount she'll receive if she files at her full retirement age if she files at 62 that amount would be reduced down to six hundred and fifty dollars so let's change the scenario a little to something that may be a little more common assuming again that the higher income earner has a for retirement age benefit of 2000 but this time the spouse has her own benefit of $800 from our conversation so far you've probably already figured out that she is still eligible for the same $1,000 because a spousal benefit is equal to your own benefit or up to one half of the higher earning spouse is benefit but here's one key difference for this example they would pay her benefit first and then finish it with the spousal benefit as long as she filed at her full retirement age she would still receive that same $1,000 because there are no reductions to either her benefit or her spousal benefit but let's go to the chart again and see how different age combinations would affect each of these benefits to clarify at 67 her own benefit would be $800 and her spousal amount would be $200 if she filed for these benefits at 62 she would receive five hundred and sixty for her own benefit and one hundred and thirty dollars for her spousal amount but what if she wasn't eligible yet for the spousal amount this would most likely be due to her higher earning spouse not having filed yet or maybe something else but remember they have to file before you can get your spousal benefit from them in this case if she filed at 62 she would only receive her benefit of five hundred and sixty dollars and then what she became eligible for a spousal benefit let's assume age 65 her age at that point in time would determine how that portion would be reduced not her age when she filed for her own benefit so if you want to figure out these reductions or increases for yourself here are the monthly numbers because I know not everyone files at 65 or 66 or 67 some people file at 65 and three months so there are three separate bands that apply there is the more than 36 months from full retirement age within the 36 month window a full retirement age and then after full retirement age for the band of more than thirty six months away from for retirement age both spousal and your all benefits are reduced the same 5/12 of 1% per month within the 36 month window spousal benefits are reduced by 25 36 of 1% and your own benefit is reduced by five ninths of one percent after full retirement age spousal benefits are not increased at all but your own benefits are increased by two thirds of one percent now I know we've covered a lot of ground in this video but I hope it's helpful when you're planning how to file for Social Security just remember this is your retirement stay curious stay informed you're making the right moves by watching heavy videos like these but don't take this as specific advice for your own situation keep doing your own research talk to your own advisers but most importantly continue to educate yourself and stay curious you can further your learning by subscribing to this channel if you haven't already you can just click this right here to do that and then you can watch the video you see on the right hand side of the screen as well thank you so much for watching hit that like button if this was valuable for you hope you have a fantastic day

Channel: Devin Carroll

Views: 441,462

Keywords: social security, social security benefits, retirement planning, devin carroll, retirement, financial planning, social security taxes, working and social security, social security administration, retirement income, ssdi, ssa, social security disability, taxes in retirement, social security retirement benefits, social security at 62, social security retirement, social security income, taxes on social security, spousal benefits, spousal benefits social security, spousal benefits i

Id: PSktJ1Grk10

Length: 14min 35sec (875 seconds)

Published: Mon Mar 11 2019