I am 76 and I have been receiving my benefit since age 62—four years before my full retirement age (FRA). My wife is now 61 and will retire at age 65—two years before her FRA. She will begin drawing her teacher retirement from the State of Texas, which is no longer subject to the Government Pension Offset. How do I calculate her Social Security spousal benefit?
– Norman
The elimination of the Government Pension Offset and Windfall Elimination Provision were a welcome development for teachers in Texas and beyond. Many retirees, such as your wife, are now eligible to receive Social Security benefits according to the same rules that apply to everyone else. Let’s look at how those work and how to calculate your wife’s benefit.
If you have similar questions about Social Security, retirement planning or investing, connect with a financial advisor and see how they can help.
Social Security Spousal Benefits
To set some context for others who may not be in the exact same situation as you, let’s start by reviewing the basics of spousal benefits.
Social Security benefits are based in part on your earnings record. Larger lifetime earnings result in larger benefits. Each spouse in a married couple can claim on either their own earnings record or their spouse’s record.
A person who claims on their spouse’s record can receive, at most, 50% of their spouse’s primary insurance amount (PIA)—a person’s benefit at FRA. It often makes the most sense for the lower-earning spouse to file on the higher-earning spouse’s record when that difference is significant. This is likely your situation, as I know teachers in Texas don’t typically pay into Social Security. Because the earnings record is based on your “covered” earnings, your wife likely has very little on her earnings record.
For a simple example, suppose your FRA benefit is $2,000 per month and your wife’s benefit is $800 per month. By claiming a spousal benefit, she could receive up to $1,000 (half of your $2,000 benefit) per month instead of filing under her own earnings record.
(For more help planning around spousal benefits, consider speaking with a financial advisor.)
How Filing Early or Delaying Affects Spousal Benefits
Claiming your benefit before reaching FRA reduces it, while delaying past FRA increases it (until age 70). However, the calculation differs slightly for those claiming spousal benefits.
Keep in mind that spousal benefits are not affected by the primary earner’s filing age. The primary earner’s full retirement benefit is always the starting point.
Even though you filed at age 62 and received a reduced benefit, your wife’s spousal benefit is based on the benefit you would have received at 66. However, spousal benefits don’t increase if the primary earner waits until after FRA to claim their benefit. For example, if you had delayed your benefit until age 70, your wife’s spousal benefit would still be based on your benefit at age 66 (FRA).
Lastly, a spouse cannot claim spousal benefits until the primary earner begins collecting their own benefit. So, if you were delaying your benefit past FRA, your wife would have to wait to collect her spousal benefit.
(And if you need additional help navigating the ins and outs of Social Security, find a financial advisor who specializes in retirement planning.)
The Lower-Earning Spouse’s Filing Age
Although spousal benefits are always based on the higher earner’s PIA, they are reduced if the spouse files early. As with their own retirement benefit, someone can claim a spousal benefit as early as age 62.
Spousal benefits are reduced based on how early they are claimed:
- For the first 36 months before FRA: Reduced by 25/36 of 1% per month (approximately 0.694% per month or 8.33% per year).
- For any additional months beyond 36: Reduced by 5/12 of 1% per month (approximately 0.417% per month or 5% per year).
That works out to about 0.694% per month, or 8.33% for each year, for the first three years. Beyond that it’s .416% per month, or 5% for each year. This reduction is applied to the full spousal benefit, which is 50% of the primary earner’s FRA benefit.
Calculating Your Wife’s Social Security Spousal Benefit
So, with that in mind, calculating your wife’s spousal benefit can be fairly simple. To calculate her benefit, determine what your full retirement age benefit (PIA) would have been and apply the relevant reduction.
- If she waits until her own FRA to begin drawing, her spousal benefit will be 50% of your FRA benefit.
- If she claims before her FRA, her benefit will be reduced according to the formula above.
For example, let’s say you would have been eligible for a $3,000 monthly Social Security benefit at your FRA. While your wife has minimum “covered” earnings, she now qualifies for a spousal benefit thanks to the repeal of the GPO. If she waits until her own FRA of 67 to claim her spousal benefit, she would receive 50% of your PIA or $1,500 per month.
However, if she decides to claim her spousal benefit at age 65—24 months before her FRA—her payment would be reduced by 16.67% (24 months × 0.694% per month). As a result, her spousal benefit would be $1,250 per month.
(And if you need more help calculating your Social Security benefits or deciding when to claim them, speak with a financial advisor about your income plan for retirement.)
Bottom Line
With the elimination of the GPO and WEP, many government pension recipients who were previously ineligible for Social Security benefits are now eligible. For workers with little or no covered earnings, this likely means a spousal benefit. If they file at their FRA, they receive 50% of the primary earner’s FRA benefit. That benefit is reduced if they file early.
Social Security Planning Tips
- If you need help deciding when to claim your Social Security benefits and have other retirement planning questions, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Up to 85% of Social Security benefits can be taxable depending on your combined income, which includes wages, withdrawals from traditional IRAs and 401(k)s, pensions and even tax-exempt interest. To reduce tax liability, consider strategies such as withdrawing from Roth IRAs (which don’t count toward combined income), managing required minimum distributions (RMDs) carefully, or spreading out taxable income over multiple years to stay within a lower tax bracket.
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Brandon Renfro, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Please note that Brandon is not an employee of SmartAsset and is not a participant in SmartAsset AMP. He has been compensated for this article. Some reader-submitted questions are edited for clarity or brevity.
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