Hi, my client and his spouse are of similar age, currently 65. Client has PIA of about $2,500 whereas his spouse has PIA on her own record around $800. I’m wondering if the wife can start taking reduced benefits now (before FRA) and later switch to spousal when husband reaches his FRA and opts for file and suspend.
That’s an excellent question. In this situation, the spouse may be tempted to take her own reduced benefits early hoping that she will get half of her husband’s PIA when he reaches his FRA. Unfortunately, if she takes her own benefits before she attains FRA it will reduce not only the benefits on her own record but also her spousal benefits.
According to SSA: A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month. In fact, they have the following example on their website.
Mary Ann qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive her own $250 retirement benefit, and we will add $150 from her spouse’s benefit, for a total of $400. If she takes her retirement benefit before her full retirement age, both amounts will be reduced.
Whether or not it makes sense to take benefits early also depends on life expectancy. The Social Security Maximizer™ also allows you to run such tests under “Specific Scenario Output” option.