Series I bonds, SS benefits and other reader questions
my Social Security benefit. My wife is 62. What are the pros and cons of her applying for a spousal benefit at 62?
A: When an individual files for a Social Security benefit at 62, any benefits are discounted permanently relative to their amount if applied for at full retirement age.
Many individuals are under the false impression that when they reach their full retirement age, they can reapply and then receive a higher benefit. That is incorrect. Benefits are permanently discounted, be it a benefit based on your work history or a spousal benefit.
The only exception is related to survivor benefits. Your survivor benefit is based on your age when you apply. It is discounted between age 60 and your full retirement age. If you apply for a survivor benefit at your full retirement age or later, you are entitled to 100% of the Social Security benefit your spouse was receiving, if that benefit is greater than the benefit you would receive based on your work record.
Q: I intend to retire in a few years at my full retirement age. My wife never worked at a job covered by Social Security. She was a teacher and receives a relatively small pension. I have been told that she won’t receive a full spousal benefit or survivor benefit because of her pension. That can’t be right. Is it?
A: Unfortunately, what you have been told is correct. When an individual receives a pension from work outside of Social Security, it impacts the amount of spousal benefit and/or survivor benefit he or she is entitled to. This is known as the Government Pension Offset (GPO).
Spousal benefits and survivor benefits are reduced by two-thirds of the pension received from work done outside of the Social Security system. For information regarding GPO, a fact sheet is available at www.ssa.gov/pubs/EN-05-10007.pdf. A GPO calculator is at www.ssa.gov/planners/retire/gpo-calc.html.