A common question that I get regarding claiming Social Security benefits has to do with the potential negative impact of claiming a benefit on either a spouse, divorced spouse, or even their own future benefit.
In today’s article, let’s discuss when claiming a Social Security benefit could negatively impact another benefit.
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DIVORCED SPOUSE BENEFITS
Divorced spouse benefits are an area where an election by one spouse does NOT negatively impact the other spouse. Starting a divorced spouse benefit when one is able does NOT negatively impact the ex-spouse’s benefit nor does it impact the ex-spouses married partner’s benefit.
It is a bit strange, but both the ex-spouse and the current spouse of a worker can both draw a benefit from the working record of that same individual and nobody’s benefit is impacted negatively.
You can utilize the divorced spouse benefit on the ex-spouse working record once both spouses (primary worker and ex-spouse) have reached the age of 62.
SPOUSAL BENEFITS
It is a requirement that the opposite spouse has begun their own benefit in order for a spouse to begin their own spousal benefit. Beginning a spousal benefit does NOT negatively impact the primary workers benefit in any way.
Keep in mind that the maximum amount that a spousal benefit can be is 50% of the primary workers benefit.
BENEFIT SWITCHES
Depending on a workers age, they may qualify to begin one benefit and later switch to another benefit.
For example, one may begin with the divorced spouse benefit at full retirement age and then switch to their own benefit at age 70. Alternatively, it could make sense to begin with a spousal benefit at full retirement age and later change to your own benefit at age 70. Finally, it could also make sense to begin with your own benefit and later changed to a survivor benefit or vice versa.
It is important to understand that each benefit listed above is its own distinct and separate benefit that does not get negatively impacted by a previous choice. For example the individual who begins with a divorced spouse benefit at full retirement age and later changes to their own benefit at age 70 will not have any negative impact on the age 70 benefit. Whatever the age 70 benefit previously was projected to be would continue on regardless of the fact that the individual took a divorced spouse benefit while they were waiting to activate it.
THE NEGATIVE IMPACT OF A PRIMARY WORKER’S EARLY SOCIAL SECURITY BENEFIT ON A SURVIVING SPOUSE
Where I see the biggest negative impact in Social Security election is on the surviving spouse.
If a primary worker elects to take their Social Security benefit early, such as at age 62, it can negatively impact the survivor benefit. Once the primary worker has passed, the surviving spouse will only be able to maintain a single Social Security benefit. If the surviving spouse did not have a high working record, then by default they will be left with the primary workers Social Security benefit, which is the reduced benefit taken early.
Depending on all the other financial circumstances for the surviving spouse, being left with a single reduced Social Security benefit can put tremendous strain on the finances and/or investment portfolio.
It is recommended that at least one spouse delay until age 70, if financially feasible, to provide whichever surviving spouse remains the highest benefit possible.
If you have any questions please feel free to contact me.
