Does my wife get a percentage of my Social Security benefit after she retires and claims her own benefits?
I plan on retiring at (or after) full retirement age. My wife is five years younger than me and plans to retire between the ages of 62-65. Does my wife get a percentage of my Social Security benefit while she continues to work? Does she get a percentage of my Social Security benefit after she retires and while claiming her own Social Security benefit?
Joshua Escalante Troesh, CFP | MBA
Your wife is entitled to benefits based on your Social Security benefits, but it will not impact or reduce how much you receive. She is entitled to 50% of your benefits or 100% of her own benefit (but not both). And you are entitled to 100% of your benefits regardless of what she does. Her '50%' benefit is known as the spousal benefit.
At the very least your wife should claim Social Security benefits at some point, because it will be extra money for your family, and it will not impact your personal Social Security benefit. The rest of this answer is going to get complicated, because the Social Security system is ridiculously complicated. There are over 700 different claiming strategies for Social Security, and the optimal one for you will depend on a wide variety of personal factors.
Compare Your Wife’s Benefits to Her Spousal Benefit
Your wife may also be entitled to her own benefits on her own work record, which may or may not be more than half of your benefit. So an analysis should be done regarding which benefit provides the most money for your family.
To complicate things more, it may be possible for you and your wife to receive more money by claiming her spousal benefit (50% of your benefit) and then switching over to her own benefit at a later age. There are a lot of factors which will determine if this strategy would be beneficial or even allowed under the Social Security system.
Timing is Also Important
Whether you wife claims on her work record, on her spousal benefit, or on both in succession; when your wife claims will be important. If you wife claims a benefit prior to her full retirement age, it will permanently reduce the benefits she receives. This is true even if she claims early on her work record and then switches to a spousal benefit or vice-versa.
Finally, both you and your wife will see significant increases in your Social Security benefits for each MONTH you wait to claim Social Security. If you have other investments, it could be advantageous to create a plan which allows you to retire between age 62 and 65, but wait to claim Social Security as late as age 70. There are a lot of factors which would go into this plan including your retirement income needs, your investments and sources of other income, and you and your wife's health and family history.
Seek Help
I recommend you consider seeking the guidance of a fee-only and fiduciary financial adviser, at least for this Social Security question. Myself and many other advisers can work on a per-project basis, and it would be valuable just to have a professional investigate this question for you and come up with the best claiming strategy. Social Security is extremely complex, and the choices you make can never be changed. Paying an adviser a couple hundred dollars an hour to investigate and develop an optimal claiming strategy could help you receive tens to hundreds of thousands of dollars more from the Social Security administration over your lifetimes.