Spousal Benefit Filing Tips For Maximizing Your Social Security Retirement Benefits

and hello and welcome everyone uh we have a few different topics that we want to cover in a little more in depth than what we would normally do for a full presentation where we're talking about social security benefits across the board and so today we're going to talk a little bit more in depth with social security benefits specifically about spousal benefits and so we're just going to take a few minutes here to talk about some things that you want to be aware of and thinking about when you're filing a spousal benefit now one of the things that i want to uh i want to uh let everyone know if you are seeing this video maybe for the first time you don't know much about einstein retirement workshops einstein retirement workshops is a national organization we do workshops on lots of retirement topics our two most popular topics i would say are social security benefits and taxes and so we would certainly invite you to join us for any future events that you would uh that you would be more than welcome to attend we'd love to have you for one of our full uh and in-depth workshops my name is kyle mccauley i'm one of the national presenters here at einstein retirement workshops and again today what we're going to do is we're going to do a little bit of a deeper dive into some things about spousal benefits normally in a full workshop setting i have to move fairly briskly on some of these topics and i don't go quite as deep or in depth into these topics as i would like to do for our time here today so let's talk a little bit about spousal benefits the slides that you're seeing here are slides that are directly from our full presentation i'm just going to take a little bit slower approach to these specific items and highlight them again in a little more depth than what i would in a full presentation so first thing i want to say is that spousal benefits one of the things that often confuses folks and this comes from our experience in working with people and helping them make good high quality uh filing decisions one of the points of confusion is that the the bullet point number two the primary worker has to have filed in order for you to have access to a spousal benefit so the reason why that's really important is that uh some of our married couples that we work with we do see that they that one spouse doesn't have a social security benefit or maybe has a benefit that is very small not a substantial benefit at all but the other worker maybe has a 2 000 or 3 000 a month benefit or somewhere in the middle and so the primary worker is always if we're talking definitionally here the primary worker is the person in the married couple who has the higher earnings so if you have the higher lifetime earnings for between the two of you for my married couples i'm speaking to specifically the higher earner is going to be considered the primary worker when that spouse goes to file for benefits off of the primary workers work history then one thing that's very important for you to to remember is that the primary worker has to have filed their benefit before that spousal benefit kicks in so uh if john and jane here okay we'll say we'll say john and jane uh that's always our our names for our examples so if john uh has a three thousand dollar a month benefit and jane has no work history at all then what jane is thinking is that she would like to qualify for half of his uh of her primary worker which is john the primary worker's primary insurance amount that's what pia stands for john's primary insurance amount is his full retirement age benefit so let's say john had a really high benefit three thousand dollars three thousand dollar benefit to jane half of that would be one thousand five hundred dollars so jane is thinking i would like to file that uh that spousal benefit of one thousand five hundred 500 but one critical thing that's very important to remember is that in order for jane to file that uh primary that spousal benefit off of john's work history he has to file as well so let's say jane is not working and she hits the age of 62. spousal benefits can be filed as early as the age of 62 but there again the primary worker must have also filed so if they're the same age and john has not filed his benefit yet jane cannot file off of his work history simply because she achieved the right age she has to achieve the right age which is a minimum of the age of 62 and also john has to file his benefit so jane is going to be required to wait until john files before she's able to file that spousal benefit now that is true on a couple of different fronts and i want to i'm going to switch to the next slide here because this next slide highlights some of the the changes that occur with spousal benefits okay so spousal benefits reduce on a faster schedule than your own benefit so if jane is going to file a benefit on john's work history she again has to wait until john files if they are the same age and john files his benefit okay let's actually lower down to make the math easy two thousand dollars a month okay john has a benefit of two thousand dollars at full retirement age primary insurance amount age of 66. so if john files that two thousand dollars a month jane is eligible for half of that one thousand dollars at exactly the same time they are the same age if john files his benefit early he gets 75 of the primary insurance amount so 2 000 turns into 1 500. so here's where spousal benefits get tricky normally we would say jane will get half of what john is getting but that's not actually correct what happens is because john filed early at 62 and then jane also files early at 62 jane does not get 75 percent of the 1000 she gets 70 percent of the one thousand so spousal benefits reduce at a faster rate than uh your own benefit so jane instead of getting half of 1500 which would be 750 she doesn't get 750 she only gets 700 often times in a uh in a in a social security planning situation we're encouraging when when it's reasonable to do so spouses who are relying on a spousal benefit to wait till their full retirement age because there's extra penalties for spouses who file early as compared to filing on their own work history this is also true for those who are divorced okay so those who are divorced also have to deal with this extra reduction schedule if you're filing for a spousal benefit now a very common situation will come up where either john wants to continue working or he would just like to maximize his social security benefit to get the full maximized amount by the age of 70. so john again has a 2 000 a month benefit at the age of 66. if he files that at 66 he'll get the 2 000 he can earn delayed retirement credits increasing his benefit to as much as 2 640 by the age of 70. so 2000 turns into two thousand six hundred and forty dollars the reason for that is because of the delayed retirement credits of eight percent per year and so that benefit maximizes out at that point what you'll notice here is that if john turns his benefit into 2640 he and jane are the same age jane cannot file for that benefit that spousal benefit until john files here's another glitch with the spousal benefit the spousal benefit for jane will not be 50 of what john is receiving john will be receiving two thousand six hundred and forty jane does not receive one thousand three hundred twenty half of the two thousand six forty she is not going to receive that and the reason why she doesn't receive it is because jane is not eligible for fifty percent of what he's getting jane is eligible for fifty percent of john's primary insurance amount then modified by the spousal table okay so the way to think about it is that the spousal table is independent of john's table so once you know what the 50 percent is of the of john's full retirement age benefit that comes over here a thousand dollars and then it's modified based upon the age of filing so if jane files the spousal benefit at the age of 70 you'll notice there's no delayed retirement credits meaning at the age of 70 jane's benefit is still only one thousand dollars a month which means that over the last five years one yep five years there uh she has given up uh sixty thousand dollars of social security payments because john wanted to maximize his benefit so for that reason there are times when there's a spouse with no work history and if it on the surface would make sense for the higher wage earner to delay to 70 that potential is eliminated because it not only reduces or means that they don't receive any benefits but then also their spouse can't receive any benefits okay because the spouse must delay and they are not rewarded in the same way that that john is so jane doesn't get any rewards for delaying whereas john is getting this reward for delaying of eight percent per year so what happens in a scenario this is a very common scenario where john's older well that's actually very effective and good in this situation it's very helpful for john to be older because it means that he can delay for some number of years maybe as many as five years and if he delays to the age of 70 he turns his 2000 into 2640. now if if jane's five years younger or or four years younger then she can start right away and get her full maximized spousal benefit so spousal benefits if you want to say it like this spousal benefits max out at your full retirement age whatever that happens to be so i know we have the age of 66 here we know of course that many of you have a full retirement age of 66 and some number of months there might be some of you who are young enough to have a full retirement age of 67 regardless that uh full retirement age is when your spousal benefit will uh max out so in this scenario if jane were four years younger it's perfect timing john files at 70. jane files at 66 they're both getting their maximized amount perfect so if you you need to reorganize your marriages at all and uh get someone who's exactly four years younger that's great no just just kidding uh anyway stupid joke all right so uh the point is is that spousal benefits do not increase past full retirement age and they reduce at a faster schedule when you file early now here's the next common scenario and then we'll go ahead and wrap up today's conversation so another common scenario is is that jane has a smaller social security benefit okay so she has some work history now her benefit isn't nearly as large as john's let's say her benefit is five hundred dollars a month john's is two thousand hers is five 500. now after doing some uh social security planning uh we realized for longevity reasons and income protection and inflation protection it makes a lot of sense for john to delay till 70. and so john goes ahead and delays all the way till 70. but jane knowing that she doesn't get any increases past her full retirement age she doesn't want to wait so what should jane do in this scenario where she does have her own benefit well what jane should do is she should go ahead and file for her own benefit at her full retirement age she will begin receiving that 500 a month that she's entitled to she will receive 500 a month from 66 until 70 when john files okay they're the same age so john files and goes from 2000 to 2640 and jane goes from 500 to the full thousand so jane is not penalized for filing her own benefit at full retirement age and in fact she'll get a bump up when john files down the road now one important thing to remember and this is an uh planning issue that can be uh be a little bit uh nuanced but we'll we'll cover it here i said one more thing we're gonna do two more if jane has her own benefit of one thousand dollars a month let's say her spousal benefit is one thousand five hundred that would mean if she started with her own benefit first she'd get a thousand and then when the spousal benefit kicked in later she'd go to 1 500. okay that'd be nice but what if jane files at the age of 62. here's how this works the 1000 that that's her benefit she files at 62 she's getting 750 dollars the five hundred dollars in addition that she'll get at age seventy when john files uh she will get seventy percent of that because it is based on when she filed so since she filed for her benefit at 62 she gets 1 000 or excuse me 1 000 turned into 750 and then 500 turned into 350. did i do that right i think so maybe just 300 375 350. yeah 350. okay all right good so 350. so the 500 gets turned into 350 the 1000 gets turned into 750 and so now when john files down the road at 70 instead of getting 1500 which would be half of his she's only getting 1 seven hundred and 100 dollars plus three hundred and fifty dollars okay that one gets a little bit uh trickier to grab a hold of but i hope that helps and gives you some ideas and gives you maybe some insight as when our team and and folks from our our group when we help people do planning if you've ever been in one of those meetings or are looking forward to that meeting why oftentimes we do recommend that spouses with lower benefits do some delay maybe even to their full retirement age it doesn't always work out like that but sometimes that is the way that makes the most sense and the reason for that is is that you get extra penalized if you want to think about it like that when you file a spousal benefit early okay that's all for today uh we hope this was helpful to you and we again do invite you to join us for future events and we would welcome seeing you there at any future events that we do uh we have uh events on taxes social security we are uh working on additional events that we uh plan to have out here soon uh things covering required minimum distributions uh very popular products that we that we want to try and demystify as much as possible that naughty word called annuities we want to make sure that people are highly educated about those things as well as other retirement planning topics and we're looking to generate a lot more of those and we just invite you to join us for any of them and and we'd be happy to see you so with that we'll uh close down for today and uh we do hope to see you at one of our upcoming events very soon thank you you

Channel: Einstein Retirement Workshops

Views: 43,908

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Length: 19min 3sec (1143 seconds)

Published: Wed Sep 02 2020