Advanced Underwriting Consultants

Ask the Experts – February 19

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers.  Here’s the question of the day.

Question: I have a client, age 62, with a Social Security primary insurance amount (PIA) of $500. Her husband’s PIA is $3,000. Can the wife take her own reduced benefit now, and then file for her spousal benefits at full retirement age? Would she be entitled to a $1,500 spousal benefit?

Answer: If her husband has already filed for his own Social Security retirement benefits, then she may not delay receiving spousal benefits. Therefore, she would receive a reduced retirement benefit of $375 ($500 reduced by 25%) plus a reduced spousal benefit of $750 ($1,500 less $500—i.e. $1,000—reduced by 25%). Her overall benefit in this scenario is $1,125.

If her husband has yet to file, she can begin receiving her own benefits now and delay receiving spousal benefits until she reaches full retirement age. This will allow her to avoid reduced spousal benefits.

However, even if she delays receiving spousal benefits until age 66, she will not be entitled to a $1,500 benefit. She will still receive her own reduced retirement benefit of $375. Her spousal benefit will not be reduced, remaining at $1,000 (half of her husband’s $3,000 PIA less her $500 PIA). Overall, her combined Social Security benefit in this scenario is $1,375.

If the wife files for her own benefits before her husband, she can—but is not required to—file for spousal benefits as soon as her husband files. However, she may want to postpone filing for spousal benefits if she hasn’t yet reached full retirement age since the spousal benefit would be reduced.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.