Edward Zurndorfer discusses how a spouse and young children become eligible for a Social Security benefit based on the individual’s Social Security earnings record–
A previous FEDZONE column discussed how an individual becomes eligible for a Social Security monthly retirement benefit. Upon becoming entitled for this monthly retirement benefit, the individual’s spouse and young children may also be eligible for benefits based on the individual’s Social Security earnings record. This column discusses how a spouse and young children become eligible for a Social Security benefit based on the individual’s Social Security earnings record.
An individual’s spouse is eligible for a retirement benefit based on the individual’s Social Security earnings. It is called a “spousal benefit.” But if the spouse’s own Social Security retirement benefit (based on his or her own Social Security working record) is more than half of the other spouse’s Social Security, then the Social Security Administration (SSA) pays the spouse’s retirement benefit. Otherwise, the SSA pays the “spousal benefit” which is now discussed.
Social Security Definition of Spouse
To be considered a married couple for Social Security purposes, individual and his or her spouse must meet one of the following conditions below at the time application for benefits is made. The individual:
- Is legitimately (under state law) married to the spouse; this includes a common law marriages in states that recognize common law marriages;
- Has marital status with respect to the taking of intestate personal property;
- Is a same-sex spouse; this has been true since June 26, 2015 when the Supreme Court ruled that same-sex couples have a constitutional right to marry in all states.
Entitlement to a Spousal Benefit (Retirement or Disability)
The spouse of a “fully insured” individual ( the individual has at least 40 credits of Social Security) is entitled to receive a spousal benefit if the following conditions are met: (1) the spouse must either have married to the individual for at least one continuous year before filing an application for benefits, or be the natural parent of the individual’s biological child; (2) the spouse must either age 62 or older, or caring for a child who is under age 16 and the child is entitled to benefits based on the individual’s (the other parent’s) Social Security record (see below); (3) the individual is receiving a Social Security retirement or disability benefit: and (4) the spouse must file an application for a spousal benefit. Note that a spouse is not entitled to a retirement or disability benefit of his or her own that exceed 50 percent of the individual’s primary insurance amount (PIA). The following example illustrates:
Jerome and Julia are married and both are age 65. Since Jerome and Julia have each worked ad paid into Social Security for all of their working years, each is entitled to their own Social Security retirement benefits. Jerome is currently eligible for a benefit of $2,400 per month while Julia is entitled to a benefit of $2,000 per month. Julia’s own Social Security benefit of $2,000 per month is more than half of Jerome’s Social Security monthly benefit of $2,400 (1/2 of $2,400 is $1, 200). Julia is therefore not entitled to a spousal Social Security benefit.
Amount of a Spouse’s Social Security Benefit
Suppose there is a married couple, spouse A (the higher earning spouse) and spouse B (the lower earning or no earning spouse) with respect to Social Security benefits. Spouse B’s spousal Social Security benefit – this could be a retirement benefit or a disability benefit – is equal to one-half of spouse’s A’s primary insurance amount (PIA). But spouse B’s spousal benefit may be less than one-half of spouse A’s PIA if:
- The “family maximum” applies (see below);
- Spouse B is entitled to a retirement, disability or widow(er) insurance benefit that is smaller than the spouse A’s benefit rate so that only the difference between the retirement, disability or widow(er)’s benefit, and spouse B’s benefit rate is paid; or
- Spouse B qualified for a spousal benefit but started receiving it before reaching full retirement age (FRA).
With respect to #3, a spousal benefit is reduced by 25/36 of one percent for each month of entitlement before FRA for the first 36 months. The reduction is 5/12 of one percent for each month in excess of the 36 months. The following table is an illustration of an individual’s $1,000 benefit and the spousal $500 benefit in which the individual started his or her $1,000 monthly benefit at age 62. It also shows the amount of the spousal benefit assuming the spouse’s starts the spousal benefit at age 62. Note that the amount of reduction in both the individual and the spousal Social Security benefit depends on the individual’s and spouse’s FRA.
Full Retirement and Age 62 Benefit by Year of Birth*
|Year of birth||Full (normal) retirement age (FRA)||Months between age 62 and full retirement age (FRA)||A $1,000 retirement benefit would be reduced to:||At age 62 the retirement benefit is reduced by:||A $500 spousal benefit would be reduced to:||At age 62, the spousal benefit is reduced by:|
|1955||66 and 2 months||50||$741||25.83%||$345||30.83%|
|1956||66 and 4 months||52||$733||26.67%||$341||31.67%|
|1957||66 and 6 months||54||$725||27.50%||$337||32.50%|
|1958||66 and 8 months||56||$716||28,33%||$333||33.33%|
|1959||66 and 10 months||58||$708||29.17%||$329||34.17%|
|1960 and later||67||60||$700||30.00%||$325||35.00%|
The maximum benefit for the spouse is 50 percent of the benefit the worker would receive at full retirement age. The percent reduction for the spouse should be applied after the automatic 50 percent reduction. Percentages are approximate due to rounding.
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Spouse B’s disability or retirement spousal benefit may not be payable, or may be payable only in part if:
- Spouse A is not receiving a benefit. In that case, Spouse B cannot draw on Spouse A’s benefits until Spouse A draws.
- Spouse A is under FRA, is working and earns more than the exempt amount ($21,240 during 2023).
- Spouse B is under FRA, working and earning more than the exempt amount ($21,240 during 2023) or is working outside the U.S. for more than 45 hours in a month.
- Spouse B is in the U.S. for a full calendar month and he or she is not a U.S. citizen, U.S. national or alien lawfully present in the U.S.
- Spouse B is under age 62 and does not have in his or her care a child of Spouse A under age 16, or disabled who is entitled to child’s benefits.
- Spouse B is entitled, on the basis of his or her own employment to a governmental pension (federal, state or local) not covered by a Social Security (for example, a CSRS annuitant and therefore subject to the Government Pension Offset (GPO) which, in most cases, eliminates any type of spousal Social Security benefit.
- Spouse B does not have a Social Security number and refuses to apply for one.
When Spousal Benefits End
Spouse B’s spousal Social Security benefit will end:
- When spouse B dies;
- When spouse A dies – in that case, spouse B may be entitled to a widow(er) benefit (the full amount of spouse A’s Social Security benefit);
- Spouse B is under age 62 and there is no longer a child of spouse A under age 16, or disabled, entitled to children benefits;
- Spouse B becomes entitled to his or her retirement or disability benefit and spouse B’s PIA is at least one-half of spouse A’s PIA.
Children Social Security Benefits
A child is entitled to a child’s Social Security insurance benefit, disability or retirement, of a parent if the following conditions are met:
- An application for a child’s insurance benefit is filed;
- Child is (or was) a dependent upon the parent;
- Child is not married;
- Child is: (a) under age 18; (b) age 18-19 and a full-time elementary or secondary school student; or (c) is age 18 or older and under a disability which must have begun before age 22; and
- Parent is entitled to and receiving a disability or a retirement benefit.
The term child includes the fully insured parent’s:
- Natural (biological) child;
- Stepchild under certain circumstances; or
- Grandchild under certain circumstances
Amount of a Child’s Social Security Benefits
A child’s monthly Social Security benefit amount is equal to one-half of the fully insured parent’s primary insurable amount (PIA) if the parent is entitled to a disability or retirement benefit.
The benefit paid to a child may be less if: (1) the family maximum applies (see below) and the child’s benefit rate must be reduced; (2) a disabled child is entitled to disability or retirement benefit on his or her own Social Security earnings record. In this case, only the excess is paid as the child’s insurable benefit; and (3) the parent’s monthly benefit is reduced because the parent elected to start receiving the benefit before reaching his her FRA or the parent’s benefit is subject to the Windfall Elimination Provision (WEP).
Termination of Child’s Benefits
A child’s Social Security benefit will end when: (1) the child dies; (2) the child reaches age 18 and is neither disabled nor a full-time student; (3) the child marries; and (4) the child’s parent is no longer entitled to disability insurance benefits unless the entitlement ended because the full insured parent become entitled to retirement insurance benefit.
Maximum Family Benefit
There is an overall family benefit payable on an individual’s Social Security record. Family members include a spouse, dependent children and in some cases, dependent parent(s) of the fully insured individual. In general, no more than the family maximum can be paid. The family maximum is determined by the Social Security Administration and depends on the number of family members eligible for family Social Security benefits and the individual’s PIA.
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Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.