What percentage of Social Security is spousal benefit?

Social Security Loopholes

The Bipartisan Budget Act of 2015 made what some would consider significant changes to a few key Social Security filing strategies. Specifically, the legislation removed some well-known Social Security loopholes that were used by many to increase spousal benefits. These loopholes involved the file-and-suspend and restricted filing strategies.

Why does that matter now? Some of the changes that were made were phased in over a period of time. In fact, that phase-in is still occurring, meaning that there are some individuals that are still eligible to take advantage of one of these “loopholes.”

The Restricted Application Loophole

As you may know, there is an incentive to delaying your Social Security benefits. Every year you delay, your monthly retirement benefit increases (until age 70). One Social Security loophole allowed married individuals to begin receiving a spousal benefit at full retirement age, while letting their own retirement benefit grow. This was done by filing what is called a restricted application. A restricted application essentially allows you to choose which benefit you are applying for at the time you file for benefits.

For those born in 1953 or earlier, the restricted application strategy may be an option. But, as of the date of this article’s update (January 9th, 2023), it seems this loophole has essentially shut. The reason is that anyone born in 1953 or earlier is either already 70 or will be turning 70 in 2023, and Social Security benefits may not be delayed (and increased) beyond age 70.

Aside from that, there are a few other things that would have needed to be in place before taking advantage of the restricted application. First, your spouse must have been receiving benefits at the time you filed your restricted application. Therefore, your spouse would need to have been born around 1958 or sooner in order to take advantage of this (because they would have needed to be at least 62 to file for their own benefits when you filed your restricted application.

Then, once your spouse is receiving benefits, you would have been able to file a restricted application and receive a spousal benefit while your benefit continued to grow until you turned 70.

While this may not sound like a big deal, this strategy could have caused a significant difference in the amount of lifetime benefits you receive from Social Security. In fact, the longer you live, the more pronounced that difference will be. For some, it could mean tens or hundreds of thousands of dollars. 2

Again, this loophole has essentially phased out completely as of 2023. I discuss more in the video below. (See video below)

Going forward, if an individual files prior to full retirement age and is eligible for both spousal and worker benefits, they must file for both benefits at the time of filing, meaning they cannot choose which benefit to apply for. That individual will simply receive the higher of the two benefits. This follows the new requirement called “deemed filing,” meaning that once you file for one benefit, you are deemed to have filed for all benefits.

The good news is that the deemed filing rule only applies to spousal benefits, not survivor benefits or disability benefits. Therefore, you can choose to begin survivor benefits independently of your own retirement benefit.

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The Voluntary Suspension Loophole

Prior to April 30th, 2016, this Social Security loophole allowed a married worker to voluntarily suspend his/her own benefits after full retirement age, allowing the spouse to receive spousal benefits while the worker was not collecting benefits. Effective April 30, 2016, spousal benefits can only be received if the worker spouse is collecting retirement benefits.

If you are receiving a divorced spouse benefit, the change in the law does not apply to you. You may continue to receive a spousal benefit if your ex-spouse decides to voluntarily suspend his/her benefit.

You may wonder if there is any reason to use the file-and-suspend strategy today, and the answer is yes, maybe! If you started receiving benefits but would now like to voluntarily suspend and earn higher benefits for delaying, you can do so. This may be the case if you started receiving benefits, but then gained some type of employment, received an inheritance, or suddenly discovered you do not need the benefits you’ve been receiving. If that’s the case, you can suspend your benefit so that you earn delayed credits. But please note, if your spouse was receiving a spousal benefit, that benefit will be suspended as well. And, to voluntarily suspend, you must have at least reached your full retirement age.

Both loopholes are discussed more in-depth at https://www.ssa.gov/planners/retire/claiming.html. 1

Bottom Line

The restricted application loophole is one that has basically closed. In my experience, this is the one most people think of when they think of Social Security loopholes. The file-and-suspend strategy, used in conjunction with the restricted filing application, is a thing of the past, and has been outlawed since 2016.

Before you file, it’s important to discuss your options with your local Social Security office and a qualified financial advisor with expertise in Social Security filing strategies.

If you are interested in discussing your retirement plan with an advisor, and have a portfolio value of at least $500,000, contact CarsonAllaria Wealth Management at 618-288-9505 or schedule your free appointment . In just 15 minutes, we can help identify if we’re a good fit to help you sort through issues like Social Security, Medicare, retirement investing, and getting you on the right track toward reaching your own definition of retirement success.

2 This claim is based on confidential Social Security analyses that have been completed. Several assumptions must be made in order to estimate the difference in filing strategies, including but not limited to life expectancy and inflation rates

How Are Social Security Spousal Benefits Calculated?

To understand Social Security benefit calculations, you first need to understand one piece of jargon: “primary insurance amount” (PIA). A person’s primary insurance amount is the amount of their monthly retirement benefit, if they file for that benefit exactly at their full retirement age.

A Social Security spousal benefit is calculated as 50% of the other spouse’s PIA. Note that the age at which the other spouse files for Social Security benefits doesn’t affect this calculation.

Example: Jane files for her retirement benefit at age 63 and is therefore receiving a retirement benefit that is smaller than her PIA. Jane’s husband Bob files for a benefit as Jane’s spouse. Bob’s spousal benefit will initially be calculated as 50% of Jane’s PIA. (Key point being: it’s 50% of Jane’s PIA, rather than 50% of what she’s actually receiving.)

If Jane had filed for retirement benefits after her full retirement age (and were therefore receiving an amount larger than her PIA), Bob’s benefit as Jane’s spouse would still be calculated as 50% of Jane’s PIA. Again, the age at which Jane files for retirement benefits does not affect the amount that Bob can receive as Jane’s spouse.

Complicating Factors: Spousal Benefit Reductions

An assortment of other factors can come into play, which could reduce your benefit as a spouse. For example:

If you are receiving a retirement benefit of your own, your spousal benefit will be reduced.
If you file for spousal benefits prior to your full retirement age, your spousal benefit will be reduced.
If you are receiving a government pension from work that wasn’t covered by Social Security taxes, your spousal benefit will be reduced by the “government pension offset.”
If your spouse is disabled or if you have a minor child or adult disabled child, the family maximum rules may result in your spousal benefit being reduced.
If you are collecting a spousal benefit while under full retirement age and you are working, the earnings test may result in some or all of your spousal benefit being withheld.

We will discuss the GPO, family maximum rules, and earnings test in other articles. For now, we will discuss only the first two potential sources of reduction: entitlement to your own retirement benefit and filing prior to full retirement age.

Spousal Benefit Reduction Due to Own Retirement Benefit

If you are receiving a retirement benefit of your own, your benefit as a spouse will be reduced by the greater of:

your PIA or
your monthly retirement benefit.

Example: In addition to receiving a benefit as Jane’s spouse, Bob is also receiving a retirement benefit of his own. Because he is entitled to a retirement benefit of his own, he will not receive the full spousal benefit (i.e., 50% of Jane’s PIA). Instead, his spousal benefit will be reduced by the greater of a) his own PIA or b) his monthly retirement benefit.

Spousal Benefit Reduction Due to Early Entitlement

If you file for a spousal benefit prior to your full retirement age, that spousal benefit will be reduced due to early filing. The reduction is 25/36 of 1% for each month early, up to 36 months. For each month in excess of 36 months, the reduction is 5/12 of 1%.

Example (continued): Bob’s full retirement age is 67. Bob files for his retirement and spousal benefits at age 65 (i.e., 24 months early). As a result, his spousal benefit will be reduced by [24 x 25/36 of 1%] — or 16.67%.

The final calculation of Bob’s spousal benefit will be 83.33% x (50% of Jane’s PIA, minus Bob’s PIA). And to that, we would add Bob’s own retirement benefit to find the total amount of his monthly benefit.

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Social Security Rules

How to Calculate a Social Security Retirement Benefit
How Are Social Security Spousal Benefits Calculated?
How Are Social Security Survivor Benefits Calculated?
How Do Child-in-Care Spousal Social Security Benefits Work?
How Do Social Security Mother/Father Benefits Work for a Surviving Spouse?
How Does the Social Security Earnings Test Work?
Retroactive Applications for Social Security Benefits
How Much Can I Earn While on Social Security Disability?

Social Security Planning

Why Delaying Social Security Doesn’t Provide an 8% Return
Social Security Planning for a Couple with Similar Earnings History
Can I Hit My Maximum Social Security Benefit Before Age 70?

What Percentage of Social Security Benefits Does a Widow Receive?

The Social Security Administration (SSA) administers three programs to provide financial support to different groups of Americans who are either unable to work due to a disability or who reached their full retirement age (FRA). Each program is governed by a distinct set of rules that can seem complicated to someone unfamiliar with the government’s system. The Disability Experts of Florida was founded to ensure that every person gets immediate help finding answers about Social Security Disability benefits and expert assistance from experienced professionals obtaining those benefits when they’re ready. In our 35 years of helping thousands of people get the benefits to which they were entitled, Disability Experts of Florida has become widely recognized for its Social Security expertise. Trust us to help you get the answers and the benefits you deserve.

How Are Spousal Benefits Determined?

Every individual and all married couples will earn different amounts of income over the course of their working life. Some couples include one income earner and another who remains at home performing other unpaid work. The Social Security programs were designed to apply across the board, covering every eligible person who fits into the criteria of one or more programs. For Social Security Old Age Retirement (SSOAR) benefits and Social Security Disability (SSD) benefits, the monthly payments to recipients are based on their lifetime earnings. The SSOAR and SSD programs use the same formula to determine the amount paid to program beneficiaries. The Social Security Administration looks at the 35 highest earning years during the applicant’s working career and adjusts each year to account for an increase in the cost of living. Then it adds those 35 incomes together, divides the sum by 35 to find an annual average income, and then divides again by 12 to find the Average Indexed Monthly Earnings (AIME). It is this AIME figure that the SSA plugs into a formula that produces each eligible worker’s Primary Insurance Amount (PIA), the amount each recipient receives based on their career’s taxable earnings. The spouse of a deceased worker will receive 100 % of their partner’s Social Security Disability benefits when the surviving spouse reaches their full retirement age (FRA) . If a surviving spouse younger than their FRA applies for survivor benefits based on a deceased spouse’s work history, they would receive a smaller percentage of their late spouse’s benefits. The surviving spouse could not receive more than the original worker would have received in SSOAR benefits if the deceased themselves filed before they reached their FRA.

If Both Spouses Are Eligible for Social Security Old Age Retirement

When both spouses work and are eligible for their own Social Security Old Age Retirement benefits, the lower-earning spouse has several options. But let’s assume the couples described in this section of our blog post have all reached the full retirement age. If the higher-earning spouse’s benefits are more the twice the dollar value of the benefits the lower-earning spouse receives, then the spouse receiving the lesser amount can claim spousal benefits under their partner’s earnings. That will increase the lower benefit amount to as high as half the higher earner’s benefit amount. However, if the higher-earning spouse dies, the spouse that opted to receive the one-half spousal benefit is eligible to switch over and receive 100 % of their now deceased partner’s benefit. However, if the lower-earning spouse is the first to die, the surviving widowed spouse would choose to continue to collect the benefits earned on their own work history. So, in this case, the survivor would not submit a survivor’s benefit claim.

Divorce Spouse Is Also Eligible to Receive Retirement Benefits Based on Their Ex’s Record

Divorced spouses who survive their former spouse are equally entitled to claim survivor benefits based on their ex-spouse’s working career if the marriage lasted for at least 10 years and the divorced survivor does not marry until after they reach age 60. This is true even if the deceased former spouse remarried and their current spouse also files for survivor benefits based on the decedent’s working history. The amounts paid to other surviving claimants are unaffected by the benefits paid to a surviving divorced spouse. Both the current and the former surviving spouses could receive 100 % of their late spouse’s benefits.

Applying for Survivor Benefits Before Reaching Full Retirement Age (FRA)

Surviving spouse aged 60 thru FRA receives between 71 ½ % to 99 % of the decedent’s benefit;
Disabled surviving spouse aged 50 thru 59 receives 71 ½ % of the decedent’s benefit;
Surviving spouse at any age caring for a child under 16 years old receives 75 % of the decedent’s benefits.