How Social Security Spousal Benefits Really Work: A Case Study

Barb’s own benefit will be compared to half of his PIA. The SSA will determine her highest calculated benefit: her own benefit or a combination of her benefit plus a spousal top-up.

Let’s assume her own PIA is $1,800 and she claims at FRA. The comparison:

Based on her own worker record, she’d get $1,800; or
For a spousal benefit, her calculated benefit is 50% x $2,600 = $1,300.

In this situation, she’ll only receive her own benefit. Her wages were high enough to create a Social Security benefit that’s more than half his PIA.

Now, let’s say her own worker PIA = $1,000. Her calculated spousal benefit is still $1,300. When she claims, she’s deemed to claim both benefits: her own plus her spousal top-up. Again, she cannot split the benefits — they come joined together in one single payment.

When Barb claims at FRA, she’ll technically receive her own $1,000 plus a $300 spousal top-up. Because Tom already is claiming, once she files, she’ll simultaneously get both pieces to her benefit package.

Her Advisor Missed an Opportunity

There is no splitting or choosing benefits when born after Jan. 1, 1954. Barb’s big sister happens to be four years older, born in 1952. So, Georgia was in fact eligible for the restricted application.

She claimed spousal benefits first, and recently switched to her maximum benefit at age 70. Her advice was sound; she just didn’t know about the closed loophole.

More frustrating to Barb, “Our financial advisor never talked to us about my Social Security.”

Either the advisor doesn’t know enough about Social Security to help, or they missed the opportunity to offer important, critical retirement income advice. How Barb decides to address this may turn out to be a problem for the advisor.

Marcia Mantell is the founder and president of Mantell Retirement Consulting Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors and their clients. She is the author of “What’s the Deal with Retirement Planning for Women?” and “What’s the Deal with Social Security for Women?” She blogs at BoomerRetirementBriefs.com.