Social Security and Married Couples
For an introduction to social security retirement benefits, please read this article first. This second article on social security describes additional retirement benefits that may be available to married couples.
If you are married, it is possible that the size of your social security benefit may be larger that what you might otherwise receive based on your own individual contributions into the system.
However, various factors including the Government Pension Offset (GPO) can reduce or eliminate the effect of those additional benefits.
Background
In the 1930s, benefits were established to compensate spouses who stayed home to raise a family and were financially dependent on the working spouse, even if they had no employment history.
However, it is now common for both spouses to work, each earning their own social security retirement benefit. Social security attempts to balance the needs of these two different household models.
Spousal Benefits
When the first spouse retires, the second spouse becomes eligible for a benefit of up to 50% of the first spouse’s social security retirement benefit. The second spouse must be at least 62 or taking care of a child under the age of 16.
Example 1: Spouse A retires at the normal retirement age (65–67 based on birth year), and receives $1000 a month in social security benefit. Spouse B is the same age as spouse A, but has never worked. Spouse B applies for spousal benefits and receives 50% of the spouse A retirement benefit, or $500.
However, if the second spouse has worked and is entitled to receive their own social security retirement benefit, the second spouse receives the bigger of the two benefits.
Example 2: Two working spouses of the same age retire at the normal retirement age and both receive a social security check. Based on each spouses earnings history, spouse A receives $1000 a month, and spouse B receives $800 a month. Because spouse B benefit is greater than 50% of the spouse A benefit, spouse B benefit is unchanged at $800.
Example 3: Two working spouses of the same age retire at the normal retirement age and both receive a social security check. Based on each spouses work history, spouse A receives $1600 a month, and spouse B receives $600 a month. Because spouse B benefit is less than 50% of the spouse A benefit ($800), spouse B receives $800 rather than $600.
Early Retirement
The penalties for early retirement apply to each spouse independently. If the first spouse retires early, as shown in the first article, the Primary Insurance Amount (PIA) could be reduced by as much as 30%.
However, if the second spouse applies for spousal benefits prior to their reaching the normal retirement age, the spousal benefit could reduced by as much as 35%.
Example 4: Spouse A is age 67 and retires at the normal retirement age receiving $1000 a month. Spouse B has never worked and is age 62 but chooses to apply for spousal benefits. The normal spousal benefit would be 50% of $1000, or $500. However, since spouse B is applying for benefits 60 months before their normal retirement age, the spousal benefit is reduced by an additional 35% resulting in a $325 benefit.
The reduction is computed by reducing the benefit by 25/36 of 1% for each month for the first 36 months.
36*(25/36)*.01 = .25
The reduction from the remaining 24 months reduce the benefit by 5/12 of 1% for each of these remaining months
24*(5/12)*.01 = .1
.25 + .1 = .35
(1.0-.35) * $500 = $325
If the second spouse retires at the normal retirement age, the second spouse would receive 50% of the original PIA, regardless of when the first spouse retired.
Example 5: Spouse A is age 62 and chooses early retirement. The PIA is calculated to be $1000 but is reduced to $700 due to early retirement. Spouse B has never worked, but is age 67 (normal retirement age). Spouse B receives 50% of $1000, or $500.
See this for additional details on the impact of early retirement on spousal benefit.
Widow/Widower Benefits
The deceased must have already qualified for benefits, normally 40 credits for those older than 30 (fewer credits are required for those who are younger).
If the widow(er) has reached the normal retirement age, the benefit will pay the greater of what the widow(er) was already receiving or 100% of the benefit amount the deceased was receiving.
If the widow(er) is age 60 or older, but not yet the normal retirement age, the benefit is adjusted downward up to 28.5% (.339 per month before normal retirement age). See Receiving Survivor Benefits Early.
If the widow(er) remarries after the death of their spouse, the remarriage will not terminate the widow(er)’s benefits as long as the benefits have been claimed prior to the remarriage.
Government Pension Offset (GPO)
While only about 15% of private sector employees have pensions, as much as 86% public sector employees (federal, state, local, education, health care) now have access to pensions.
However, many of those public sector organizations have received waivers to opt-out of the social security system. That means that during the time that people worked for one of these organizations, no social security tax was paid by the employer or withheld from the employee’s wages.
Before enactment of the Government Pension Offset (GPO) in 1977, if spouse B in Example 2 was a government employee who didn’t pay into social security and earned an $800 government pension, the SSA paid spouse B the full spousal benefit (50% of $1000) resulting in spouse B receiving a total of $1300.
The GPO was originally designed to limit the social security benefits of government employees who don’t pay social security taxes to be the same as workers in the private sector who paid social security taxes, in other words, the maximum of the two benefits. However, in 1983, congress changed the law so that the reduction in social security benefits was limited to two-thirds of the government pension.
Example 6: Two spouses retire at the normal retirement age. Spouse A receives $1000 a month from social security, and spouse B receives $800 a month from a pension (not social security). When spouse A dies, spouse B (the surviving spouse) would be entitled to receive $500 from the deceased spouse benefit. However, since spouse B is already receiving $800, 2/3 of that benefit ($533) is still greater than the $500 deceased spouse benefit, so spouse B does not receive any additional benefit.
Example 7: Two spouses retire at the normal retirement age. Spouse A receives $1200 a month from social security, and spouse B receives $500 a month from a pension (not social security). When spouse A dies, spouse B (the surviving spouse) would be entitled to receive $600 from the deceased spouse benefit. Spouse B’s pension is $500 a month, 2/3 of that is $333 which is less than the $600 deceased spouse benefit. The difference ($267) would be paid to spouse B as a surviving spouse benefit.
Divorce
If a person was married for more than 10 years, the spousal benefit is still available even after divorce. The ex-spouse must be at least 62, and if the ex-spouse has not yet retired, there is a two year delay before the person can apply for the spousal benefit.
If a person married, divorced and remarried, the spousal benefit is the benefit from the second marriage. If the person were married and divorced twice, (each marriage lasting longer than 10 years), the benefit will be the maximum benefit that would have been received under any one of the marriages.
Ex-spouse 1 social security retirement benefit: $1800/month
Ex-spouse 2 social security retirement benefit: $1000/month
The spousal benefit would be $900/month (50% of $1800).
Divorce and Widow(er)
If a person was married for 10 years or longer, and remained divorced without remarrying through age 60, the person is eligible to receive the full widow(er) benefit upon the death of the ex-spouse.
Summary
In addition to the individual social security retirement benefit, married couples have additional benefits, especially if one spouse had no individual income, or a lifetime earned income that was significantly lower than the other.
- Spouses qualify for their own retirement benefit or 50% of their spouses’ benefit, which ever is greater.
- If married 10 years or longer, even divorced spouses can qualify for a spousal benefit if they have not remarried.
- Applying for benefits before normal retirement age can reduce the spousal benefit as much as 35%.
- Those receiving government pensions may see their spousal benefit reduced or eliminated.
- Widow(er)s can qualify for up to 100% of the deceased spouse’s retirement benefit if the surviving spouse did not remarry before age 60.
- In some situations widow(er)s of ex-spouses may still qualify for widow(er) benefits.
