Dear Liz: I’m a CPA and getting conflicting answers from the Social Security office about a case I’m working on. Both clients are 70 and they’re considering legal separation or divorce. She took Social Security at 62 and receives about $1,500 a month before deductions. He started Social Security at 70 and receives about $4,600. How would her Social Security change at his death or their divorce, if she doesn’t remarry?
Answer: Based on the amounts involved, both parties are receiving their own retirement benefits and those aren’t affected by divorce, said William Reichenstein, a principal at Social Security Solutions, a claiming strategy site. (If the wife were receiving spousal benefits, those would continue after divorce as long as the marriage lasted at least 10 years and she did not remarry.)
If the husband dies and they haven’t divorced, the wife would be entitled to survivor benefits equal to his full monthly benefit amount ($4,600, plus any future cost of living increases). If they divorce and the marriage lasted at least 10 years, she also would be entitled to his full amount. Remarriage wouldn’t affect her divorced survivor benefit since she’s over 60, Reichenstein said.
My dear wife took social security early, I took social security at my FRA. It is my understanding that at my death she will receive my social security at a reduced amount. Below is where the discount is explained. This doesn’t match what Reichenstein told you.
“There is one thing that is not made clear in this article that should be: If you take benefits before full retirement age (FRA) and are able to switch to a spousal benefit later, you will still get a reduced benefit for the rest of your life because SSA calculates the spousal benefit as an “excess” spousal benefit. The excess spousal benefit (if it begins after FRA) is not reduced, but your regular benefit based on your own work history still is. Here is an example, where for simplicity I have not adjusted for COLAs. Spouse A has a primary insurance amount (i.e. the benefit they would receive at FRA) of $3,000 per month. Spouse B has a primary insurance amount of $1,000 per month. Spouse B has an FRA of age 66 but claims at age 62, and at that point Spouse A has not claimed. Spouse B will initially receive $750 per month, a 25% reduction from his/her full benefit. If Spouse A then claims 4 years later, the full spousal benefit for B would be 50% of $3,000, but the excess spousal benefit is calculated as (50% x 3,000) – 1,000 = $500, so B will receive $750 + $500 = $1,250 from that point forward, not the full $1,500. Long story short, the $250 benefit reduction from Spouse B claiming prior to FRA is permanent.”
https://finance.yahoo.com/news/switch-social-security-benefit-spousal-130049081.html
The Yahoo article is talking about spousal benefits. Those, like retirement benefits, can be reduced for an early start. Survivor benefits operate by different rules.
Isn’t the wife entitled to an excess spousal benefit? That would be the amount of her own benefit plus an additional amount to bring her benefit equal to what it would be had she taken the spousal benefit (minus the amount lost by claiming at 62)? She would have been eligible for excess spousal benefits when her husband claimed his benefit.
Given the numbers and when they filed, she wouldn’t have been eligible for a spousal benefit since her own was larger.