I don’t think I coined the term. But I may have helped spread it around the world of Social Security. I’m referring to the “spousal bump.” Every time I hear it, it makes me chuckle. It sounds like some “dirty dancing” move by an old married couple in a shady nightclub! But of course, I know that’s not what the spousal bump is. It is a term that refers to the extra benefits a wife would get as a spouse on her husband’s Social Security record.
I’ve written past columns about this issue. But I continue to get questions from readers about it. And let me point out that the questions always involve the benefits a wife can get on her husband’s record. Even though Social Security laws are gender neutral, society hasn’t been. A husband’s own Social Security benefit is almost always higher than his wife’s own Social Security benefit. So a wife is much more likely to qualify for a bump on her husband’s record. But if you happen to live in a household where the wife makes more money than the husband, then it’s the guy who could be eligible for the extra benefits. Anyway, here are a couple of recent questions about the so-called spousal bump.
I’m going to guess that your wife’s full retirement rate would have been about $735. Then we subtract that from one-half of your full retirement rate, or $1,500. That leaves $765. That would be her spousal bump. We add that to her reduced retirement benefit of $550—meaning she would get $1,315 in total benefits if you filed for your Social Security to start in July.
And if you waited until age 70 to file, she would get exactly the same rate. Why? Because the benefits paid to a spouse of a 70-year-old retiree are always based on the husband’s full retirement age rate, not his age-70 rate.
So if you were thinking you would increase her spousal bump by waiting until age 70, you’re wrong. She would get a bump of $765, or total benefits of $1,315, whether you take benefits now or wait until age 70. In other words, there is absolutely no advantage in waiting until age 70 to increase your wife’s potential spousal benefits on your record—while you are alive.
But there is an advantage in waiting until age 70 if your goal is to increase your wife’s potential widow’s benefits. And that’s because even though a wife does not share in the delayed retirement bonus you earn for waiting until age 70, a widow does.
If you wait until 70 to file for benefits, and then die, your wife’s total benefits would be bumped up to your $3,900 level. In other words, she would get her own $550 retirement check, as well as an additional $3,350 in widow’s benefits.
On the other hand, if you file for benefits now and get your full retirement rate of $3,000, then your wife’s total benefits after you die would be $3,000—including her own $550 and $2,450 in widow’s benefits.
So you and your wife just have to decide if she wants an early spousal bump because you file now or a larger “widow’s bump” later on if you wait until age 70 to file.
As explained in the prior answer, here is how they would figure your spousal bump. They would take your FRA benefit rate ($900) and subtract that from one-half of your husband’s FRA rate ($2,100). The difference ($1,200) would be added to your own benefits.
In other words, if you file for your own benefits now, you‘d start getting $1,830 in total benefits once your husband reaches FRA and you file for spousal benefits. (That’s your reduced retirement benefit of $630 plus the $1,200 bump.) If you wait until your full retirement age to file for your benefits and spousal benefits on your husband’s record, you’d start getting $2,100 in total benefits (Your FRA benefit of $900 plus the $1,200 bump.)
On first blush, waiting until your full retirement age to file seems like the smarter move. (You end up with an extra $270 in benefits.) But if you wait until your FRA to file, you would have missed out on $37,800 in reduced retirement benefits between 62 and 67. The question becomes, do you want that extra $37,800 for the next 5 years? Or do you want to forgo that to get an extra $270 per month from your full retirement age on?
