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Retirement

Taking Social Security early also affects spousal benefit

Robert Powell, Special to USA TODAY
When his wife's benefit application is denied, a man wants to know if that's correct.

Q: My wife is nine years older than I am. At age 62 she took her own Social Security benefits early at a reduced rate.

Fast forward 13 years. I am now at my full retirement age of 66 and have just applied for my full Social Security benefits. When my wife applied for her spousal benefit equal to half of my amount, she was denied. A Social Security Administration rep said that because my wife took her own Social Security early, her reduced rate would also affect her spousal benefits.

I thought "deeming" only applied if I was retired when my wife took early retirement. Is the SSA representative correct? — James Baranec, Huntington Beach Calif.

A: Since your wife filed on her own benefit early at age 62, she received a reduction in benefit, says Brian Vosberg, a certified financial planner and author of The Complete Retiree's Guide to Social Security.

This reduction, he says, is permanent and will apply to both her benefit and spousal benefit. “The spousal benefits are not going to be 50% of your benefit; it will be reduced since she began her own benefit early.”

Of note, Vosberg says he assumes that your wife’s reduced spousal benefit is less than her own reduced benefit since the Social Security Administration denied the application.

So, you may want to consider this alternative way to file: “Since you are now 66, you are eligible to collect spousal benefits without a reduction,” says Vosberg. “You can collect spousal benefits while deferring your own benefit to age 70. Each year you defer your own benefit it will increase by 8% per year. To do so you would need to withdraw your current application and submit a restricted application for spousal benefits.”

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Emailrpowell@allthingsretirement.com.

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