What Do You Know About Social Security Spousal Benefits?| Luminary Financial AdvisorsRetirement Funding
Hi, I'm Warren Burger. I'm the owner of luminary financial advisors. Today. I wanna talk about social security, spousal benefits. A lot of people come into our office and they're not even aware that these benefits exist for a non-working spouse or someone that has a, a much lower social security benefit. So we're going to go over some of the rules and a couple of examples that may apply. And if you watch to the end of the video we have a couple of free resources that we're going to offer you to help you make some of the decisions involved in this social security planning. So before we get started, I just have to let you know that this is not designed to be investment legal or or other kinds of advice. This is really just about education. Hopefully you can take some of this information, go back to the professionals in your life, your financial advisor, and see if it works for your particular situation.
So let's get into some of the rules that apply to these spousal benefits just to get started. So the spouse is eligible for up to 50% of the higher earner's primary insurance amount. So the primary insurance amount is the amount that you would get at the point of full retirement age. So if you're be, if you were born between 1955 and 1960 it's going to range from 66 to 67 years old at if you were born in 1960 or after 67 is going to be your full retirement age. Now you're eligible to start collecting the the spousal benefit at age 62, but you do have to be aware that if you do take it at 62 you're going to have a reduced benefit. So if you are at age 67 or your full retirement age is 67, and you take it at 62, you're actually going to have a 32 and a half percent benefit reduction.
If you were to take it at 60, if you're full overtime and age is 66, it would be a 35% benefit reduction. It's something that you really have to be aware of because that benefit reduction is really for the rest of your life. So it it's when you're making these decisions, you have to take into consideration all of these different factors. Okay. Now, in order to claim the spousal benefit, the higher earner must have already claimed their benefit. So you're, you can't actually, you can claim your own benefit at 62 but you can't claim the spousal benefit until the higher earner has claimed it. And it doesn't matter if the higher earner is claims it early or late. In other words some people wait until age 70 to claim the higher benefit for social security, or they may take it earlier just because their particular situation and take the benefit reduction that won't influence your spousal benefit.
It's always going to be based on the full retirement age, primary insurance amount. Okay. So with that, there's also no delay credits. So if you wait until after your primary your full retirement age, which, you know, for these examples, we're going to talk mostly about age 67. You're not going to get the delay credits that you would with your normal benefit. And, and the, the spousal benefit is considered a top off of the lower earners earnings record. So in other words, you can claim your benefit and then the spousal benefit is in addition to that, to get to that 50% level. And I'm going to give you an example here in, in just a sec. So let's go through a real world example of how this might work. Let's take a couple Sam and Diane Diane has a much higher social security benefit than Sam.
Let's just say they both have their full retirement age at 67. And at full retirement age the primary insurance amount for Diane would be $2,000 a month. And for Sam, it would be $500 a month. Okay. Now, with the spousal benefit, if they were both to collect at their full retirement age, Diane would get her $2,000 per month for her benefit. Sam would get his $500 per month, and he would get a top off amount of $500 a month so that he would ultimately be making 50% of Diane's Diane's benefit. So that's, if they're both collecting at age 67, now let's take in this example and say that Diane is still going to collect at age 67, but Sam has decided that he wants to start collecting his benefit at age 62. So I, I went over some of the percentages before, but let's just say to make it, make it easy that he's going to have a 30% reduction in benefit at age 62, because he took his his social security earlier.
So his $500 benefit starting at age 62 would be $350. Now he would collect his $350 a month from age 62 to age 67, at which point Diane is now collecting her social security benefit at her full retirement age. Sam would still get the top off amount of the $500. He would've gotten I, regardless of the fact that he took he took it earlier. So he would end up getting $350 a month, his own benefit, plus the $500 top off amount, which is $850 a month. Now, some people will look at a strategy of saying, okay, well, maybe I'll take my benefits earlier. But you, you have to also keep this in consideration with your survivor benefits, which is going to be the topic of another video in the future. So there's a lot of different moving parts when it comes to deciding when and how you're going to take your social security benefits. So you have to put a lot of thought into it and do the research. So I hope you found some of those descriptions of the rules and that example as being a little bit helpful for your situation.
I want to let you know that I have some, if you look in the comment section below, I have some free resources available for you. One is this flow chart which is, am, am I eligible for social security benefits for as a spouse? And it'll just walk you through some of this decision making process about when and how you can collect benefits as a spouse. We also have a link to our 10 years to retirement Facebook group which is all free resources and information for people that are approaching retirement, where have just recently retired and it's free. And it's just a way for us to get information out to you and crowdsource different people's experiences and see if we can all help each other. So I hope this has been good for you, and please subscribe to the channel if if you wanna see more of these videos and thank you.