Social Security Spousal Benefits
Social Security for Federal Employees
Navigating the Social Security benefits system is difficult enough for an individual, and it becomes even more complicated when trying to coordinate your benefits with your spouse. It is important to analyze your options and create a plan that will maximize benefits for both you and your spouse.
When you file for Social Security benefits, your spouse will have the option to claim 50% of your benefit, instead of taking the benefit based on his or her own earnings. This option is often utilized in families where one spouse worked only part-time or in the home, and wouldn’t typically have a high Social Security benefit based on their own work.
Quick History: Social Security Spousal Benefits
When Social Security spousal benefits were first introduced in 1930, it was common for husbands to go out and work full time, while women worked in the home and raised children, relying on their husbands for income. Of course, this is no longer typical, and it is not uncommon to see a husband taking spousal benefits on his wife’s higher earnings record.
One thing about spousal benefits that many people don’t realize is the fact that if you have filed for Social Security, your spouse can take a spousal benefit while still working. This way, your spouse can delay filing for his or her own benefits, often leading to a much higher benefit if they wait until age 70 before they start collecting their own Social Security.
Full Retirement Age
Utilizing the Social Security spousal benefit after full retirement age has no negative impact on your regular benefits, so this can provide extra money with little or no negative consequences.
This may not be the best approach for all Federal Employees, however. It is important to keep in mind that filing for a spousal benefit between the ages of 62 and full retirement age can reduce both the spousal benefit and any Social Security benefit taken in the future. You will need to reach full retirement age in order to restrict your application so your spouse can take the spousal benefit, a strategy referred to as “file and suspend.” Claiming spousal benefits before reaching full retirement age will cause a $1 reduction for every $2 in benefits for anything above $14,000.
Typically, this strategy is used by FERS employees. However, it can be a great tool for CSRS employees as well. A common misconception is that the Windfall Elimination Program prevents all CSRS employees from taking any spousal benefits, but that is not the case. Any CSRS employee who is eligible for Social Security can take some amount of spousal benefit, although it may be subject to a reduction.
Many Factors to Consider
This is only one of many factors involved in deciding the Social Security options that are best for you and your spouse. Your own unique situation will determine the benefits that you and your family need in your retirement. It’s best to consult with a financial professional who is well-versed in Federal Employee benefits to make sure your personal retirement strategy provides the retirement income you and your family need.
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