Most people are, of course, aware of the retirement benefits that workers can collect from Social Security.
However, not everyone seems to be aware that a spouse of a retired or disabled worker, even if not eligible for Social Security on their own record, may be entitled to collect benefits based on the record of the worker spouse.
Actually, even if divorced, an individual may be able to collect on the record of the ex-spouse.
In addition, if caring for a spouse's child who is under age 16 or disabled, an individual may be able to collect as well.
This article will address the situations in which an individual can collect, when they can collect, how much they can collect, and how they can do it.
No. 1: Spouse of worker entitled to benefits
An individual can collect spousal benefits. He or she becomes entitled to collect spousal benefits based on a working spouse's Social Security record when the following requirements (see 42 U.S.C. 402(b), 402(c)) are satisfied:
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Worker spouse is entitled to collect: This is the primary threshold enabling the other spouse to collect, meaning the worker spouse must be entitled to retirement or disability benefits. In this situation, the worker spouse must be either be receiving a Social Security benefit, or if at Full Retirement Age, have exercised "file and suspend"; AND
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Application is actually filed: The individual has filed an application for spouse's benefits. In this situation, keep in mind that if the spouse has reached the age of 62 by the end of 2015, they are still eligible to file a Restricted Application at Full Retirement Age (FRA), collect the Spousal Benefit, and file for benefits on their own record at a later date — by the age of 70 or before; AND
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Eligibility for retirement or disability benefits: The spouse cannot be entitled to a retirement or disability benefit based on a Primary Insurance Amount (PIA) which is equal to or larger than one-half of the worker's Primary Insurance Amount (PIA). This is a situation of "Deemed Filing", meaning the filer is presumed to be filing to collect the highest amount for which he or she is eligible — if collecting under their own retirement or disability benefits constitutes a greater amount, then the spousal amount is unavailable; AND
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Meets age requirement or exceptions: The spouse has either attained the age of 62 or meets one of the two exceptions to the age requirement below:
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has in their care, a child of the worker who is under the age of 16, OR
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has in their care, a disabled child of the worker of any age, who is entitled to benefits on the worker's Social Security record.
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The spouse can be any age if caring for the worker's disabled child.
Definition of "In their care": means that the mother or father: (1) exercises parental control and responsibility for the welfare and care of a child who is either under age 16 or a mentally incompetent child age 16 or over, or (2) performs personal services for a disabled mentally competent child age 16 or over.
In addition, the worker's spouse must also meet ONE of the following conditions:
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Married at least 12 months: The spouse must have been married to the worker for at least one year just before filing an application for benefits; OR
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Natural mother or father: The spouse must be the natural mother or father of the worker's biological child; OR
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Entitled to disability benefits: The spouse was entitled or potentially entitled to spouse's, widow(er)'s, parent's, or childhood disability benefits in the month before the month of marriage to the worker; OR
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Railroad Retirement Act eligibility: The spouse was entitled or potentially entitled to a widow(er)'s, parent's, or child's (over 18) annuity under the Railroad Retirement Act in the month before the month of marriage to the worker.
One is "potentially entitled" if he or she meets all the requirements for entitlement other than the filing of an application and attaining the required age.
Keep in mind that there is no "means test" for a spouse. The filing spouse need not be "dependent" upon the worker spouse and, in fact, could be independently wealthy and still collect spousal benefits.
No. 2: Divorced spouse entitled to benefits
As mentioned, even if divorced, a spouse can collect on a worker spouse's benefits in certain situations. The rules regarding the eligibility of a divorced spouse to collect spousal benefits are different depending upon the length of time that the divorce has been final.
Divorced less than two years
A spouse divorced less than two years is entitled to a divorced spouse's benefit based on the worker's Social Security record if the following conditions (see 42 U.S.C. 402(b)(1), 402(c)(1)) are met:
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Worker spouse entitled to collect: As in the case where the spouses are still married, the worker spouse must be entitled to retirement or disability benefits. As with a married spouse, the worker ex-spouse must either be receiving a Social Security benefit or, if at Full Retirement Age, had exercised "file and suspend" AND
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Application actually filed: The spouse must actually file an application for divorced spouse's benefits,
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Not eligible for retirement or disability benefits: The spouse is not entitled to a retirement or disability benefit based on a Primary Insurance Amount that equals or exceeds one-half the worker's Primary Insurance Amount. Again, this is a situation of "Deemed Filing", meaning the filer is presumed to be filing to collect the highest amount for which he or she is eligible — if collecting under their own retirement or disability benefits constitutes a greater amount, then the spousal amount is unavailable; AND
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Meets age requirements: The spouse must be age 62 or over; AND
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Not married: The spouse must not be married, AND
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Marriage lasted at least 10 years: The spouse was married to the worker for at least 10 years before the date the divorce became final
Divorced greater than two years ("Independently Entitled" spouse)
The requirements are different in the case of what is referred to as an "Independently Entitled Spouse" (i.e., one who has been divorced greater than two years). In this situation, greater latitude is given to the ex-spouse as noted below.
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Worker spouse entitled to collect: The worker spouse must be entitled to collect retirement or disability benefits. Note that "entitled to collect" is the only requirement here — the worker spouse does NOT have to actually be collecting or having had executed a "file and suspend." A divorced spouse who is age 62 or over and who has been divorced for at least two years is able to receive benefits based on the earnings of a former spouse who is eligible for retirement benefits, regardless of whether the former spouse has retired or applied for benefits. (This prevents a vengeful spouse from either not collecting benefits or going back to work to keep ex-spouse from collecting.) AND
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Meets age requirements: The spouse is age 62 or over; AND
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Not married: the spouse is not married; AND
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Length of marriage: The spouse must have been married to the worker for at least 10 years before the date the divorce became final.
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Waiver of two-year waiting period: As mentioned earlier, this two-year waiting period for independent entitlement to divorced spouse's benefits is waived if the worker was entitled to benefits prior to the divorce. A spouse whose divorce took place after the couple had begun to receive retirement benefits, and whose former spouse (the worker) returned to work after the divorce (thus causing a suspension of benefits), will not lose benefits on which he or she had come to depend.
It is also important to remember that one can have two, three, or more ex-spouses collecting on their worker record. The number of ex-spouses will not affect the amount eligible as a benefit.
The limit on ex-spouses really is based on the number of 10-year marriages an individual can squeeze into one lifetime!
No. 3: Amount of spousal benefits
How are spousal benefits calculated?
This depends on a number of factors including when the benefits are applied for and whether they are for spousal only or if there is a young or disabled child involved.
In addition, the income level of the worker spouse can affect the level of benefits if the earnings of the worker spouse constitute what is considered to be "excess earnings."
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Caring for underage child or disabled child: If the spouse of a retired or disabled worker is caring for the worker's child under age 16 or disabled child, the monthly benefit equals half of the worker's PIA, regardless of his age (see 42 U.S.C. 402(b)(2), 402(c)(2)).
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Spousal only: If the spouse is not caring for a child, monthly benefits starting at Full Retirement Age likewise equal half of the worker's PIA; however, if the spouse chooses to start receiving benefits at or after age 62, but before Full Retirement Age, the benefit is reduced. The benefit reduction at age 62 is 30 percent and will increase by percentages monthly, reaching 100 percent at Full Retirement Age.
Note that if the spouse chooses to receive, and is paid, a reduced spouse's benefit for months before Full Retirement Age, the spouse is not entitled to the full spouse's benefit rate upon reaching Full Retirement Age. The reduced benefit rate is paid for as long as the spouse remains entitled to spousal benefits.
Also note that if a spouse is entitled to a retirement or disability benefit that is larger than the spouse's benefit rate, he or she will receive only the retirement or disability benefit. The spousal benefit will constitute 50 percent of the spouse or ex-spouse's benefit at Full Retirement Age.
The benefit collected will be the HIGHER calculated benefit amount, based on the person's own record OR the record of the spouse. A person cannot collect both amounts.
Calculating spousal benefits
The following calculation can be used to determine spousal benefits:
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Divide the PIA of the higher-earning spouse in half;
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Subtract the PIA of the lower-earning spouse;
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The remainder is the amount payable as a spousal benefit (that is presuming "Full Retirement Age");
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If under Full Retirement Age, then the remainder must be reduced by the Reduction Factor discussed below.
Example 1: Mike's PIA at FRA benefit level equals $2,000. Rita is not eligible for her own benefits but wishes to collect spousal benefits.
Rita can collect as follows: Age 66 (FRA) = $1,000; Age 62 (48 month reduction) $700; Age 67 $1,000; Age 70 $1,000.
Example 2: Mike's PIA at FRA equals $2,000. Rita begins collecting Social Security benefits at age 62. Her PIA is $1,000. Rita collects $750 because of reduction for early benefits. At FRA, she applies for the Spousal Benefit.
Since ½ of Mike's PIA equals $1,000, Rita will now collect $1,000 as a Spousal Benefit rather than collecting her own.
Calculating Divorced Spouse Benefits
In the case of a divorced spouse, the amount of a divorced spouse's benefit is the same as a spouse's benefit amount (see 42 U.S.C. 402(b)(2), 402(c)(2)).
As a general rule, it will equal half of the beneficiary's former spouse's PIA and will be reduced if he or she elects to start receiving benefits before full retirement age.
However, a divorced spouse's benefit is paid independently of other family benefits. In other words, it will not be subject to reduction because of the family maximum limit, and will not be taken into account in figuring the maximum limit for the former spouse's family.
Also the number of ex-spouses will not affect the benefit amount.
Reduction in Spousal Benefits
As indicated above, a spouse will not always receive a spouse's full benefit; under the following circumstances the spouse will receive a smaller amount:
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Total benefits payable exceed maximum family benefits: If the total amount of monthly benefits payable on the worker's Social Security account exceeds the Maximum Family Benefit, all benefits (except the worker's benefit) will be reduced proportionately to bring the total within the family maximum limit.
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Spouse collecting under Full Retirement Age: If a spouse who is not caring for a child elects to start receiving a spouse's benefit at age 62(or at any time between age sixty-two and Full Retirement Age), the benefit will be reduced by 25/36 of 1 percent for each of the first 36 months that the spouse is under Full Retirement Age when benefits commence, and by 5/12 of 1 percent for each such month in excess of 36 months.
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Spouse entitled to retirement or disability benefit: If the spouse is entitled to a retirement or disability benefit that is smaller than the spouse's benefit rate, the spouse will receive a spouse's benefit equal to only the difference between the retirement or disability benefit and the full spouse's benefit rate. This prevents the spouse from collecting a "windfall" or more than he or she is entitled.
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Spouse entitled to government pension: The amount of a spouse's monthly benefit is usually reduced if the spouse receives a pension based on his or her own work for a federal, state, or local government that is not covered by Social Security on the last day of such employment. However, the Social Security Protection Act of 2004 generally requires that a person work in a situation covered by Social Security for five years to be exempt from this Government Pension Offset (GPO). This reduction is discussed in greater detail later in this article.
Loss of benefits due to excess earnings
A spouse can lose some or all of their monthly benefits if the worker is under the Full Retirement Age for the entire year and earnings exceed $15,720 (see 42 U.S.C. 403(b)(1)).
