Social Security retirement benefits have many important facets that need to be understood before making your retirement plan. One of these features is spousal benefits. Maria Recto, Vice President Wealth Advisor from Zions Wealth Advisors, gives us some guidance on how spousal benefits work and points out a couple of aspects you may want to think about when considering how it will affect your bottom line.
What are spousal benefits?
Spousal benefits refer to the monthly income that a spouse, or a former spouse of a disabled or a retired worker, can receive.
What is the correlation between a spouse that’s working their whole life and a spouse that is in and out of the workforce?
You don’t have to work under social security in order to qualify for those retirement benefits. There are two criteria that you’ll have to meet. First, you have to be at least 62 years old and second, you have to have a spouse, or a former spouse, that is either receiving, or is qualified to receive, retirement or disability benefits.
What is considered full retirement age? I know you just mentioned 62, but that’s when you can start taking it out.
The year you were born determines what your NRA is or the normal retirement age as far as the Social Security calculation benefit is concerned. It ranges anywhere from 65 to 67 right now.
What about somebody that is taking care of a disabled child? I know that that’s part of it; that you can receive benefits from a spouse.
Yes. You don’t have to hit any age at all as long as you are taking care of a child; if they’re disabled or age 16 and younger. That’s another area where you could start collecting spousal benefits without hitting that age requirement.
Let’s say that I have a husband that is older than I am and I reach age 62 when I decide to start collecting my benefits, but my husband waits until his full retirement age to start collecting. Can I take that step up to get half of his retirement or am I locked in where I started at age 62?
That’s a great question and I think an illustration would probably be easier to show that. Let’s say we have a married couple, John who is age 66 and Mary who is age 62. In this situation Mary has the option to wait to collect her Social Security. John worked the most out of the home and will be scheduled to collect $2,000 a month and Mary will be scheduled to collect only $600 because she had been raising the children and was in and out of the work force. If she decides to collect Social Security at age 66 she will get not only her $600 but she will get a bump up of an additional $400 which is equal to half of what John’s monthly benefit will be. However, if Mary decides to collect at age 62 just like in your example, she will still get the $400 of spousal benefit but her $600 will be reduced permanently to about 25%. Instead of $600 she will get $450.
What you’re saying is that it’s important to wait until the full retirement age, if you can afford it.
Yes but in that situation if John decides he doesn’t need the monthly benefit and could wait until age 70 to collect, at that time he will actually get a bump in his monthly benefit to about $2,640. Then when he passes away and Mary is still living, Mary will receive 100% of what john was receiving. That would be another benefit for them.
To see a video version of this information click below.
IMPORTANT NOTE: Wealth Management services are offered through various affiliate companies and non-bank subsidiaries, including Zions Trust, National Association (Zions Trust). Zions Trust is a wholly owned subsidiary of Zions First National Bank (Zions Bank). Zions Bank is part of Zions Bancorporation family of banks. Investments are NOT insured by the FDIC or any federal or state governmental agency, are NOT deposits or other obligations of, or guaranteed by, Zions Bank, its affiliates or any other bank within Zions Bancorporation, and may be subject to investment risks, including the possible loss of principal value or amount invested.
Zions Direct is a wholly owned non-bank subsidiary of Zions Bank.
Image was acquired through Creative Commons 2.0 regulation by Frnacisco Osorlo via flickr.com, cropped image.