Assumptions
The planner computes the Full Retirement Age (FRA) for both you and your spouse (if applicable) from your data, and you will input the Primary Insurance Amount (PIA) and the age at which you claim. Using this data, the planner will apply early retirement reductions or delayed retirement credits to your PIA to determine your benefits at claiming age.
The planner will also automatically calculate spousal benefits. For you and your spouse, the tool will use your own benefit or your spousal benefit, whichever is greater.
Additionally, at longevity age of the first spouse, the model will assume the surviving spouse will receive 100% of the deceased’s benefit, if greater.
Defining Spousal Social Security
In a married couple, the Social Security benefits are rarely equal. That is, one spouse’s benefit will typically be higher than the other. When the lower earning spouse's benefit is less than 50% of the higher earning spouse's benefit, the lower earning spouse may receive 50% of the higher earning spouse's benefit or their own benefit, whichever is higher. Keep in mind that the higher earning spouse must claim their own benefit before the spousal benefit is available.
Spousal Social Security benefits allow a lower-earning spouse to receive additional financial support based on the higher-earning spouse's Primary Insurance Amount (PIA) at Full Retirement Age (FRA).
The Planner automatically model spousal benefits:
The higher-earning spouse's FRA benefit must be at least double the lower-earning spouse's FRA benefit based on their own work history.
The higher-earning spouse must have claimed or be planning to claim their own Social Security benefit.
The Planner will model or switch to the spousal benefit on the date the higher earning spouse claims their own benefit.
A reduction in spousal benefits will be applied if the lower earning spouse claims their own benefit prior to reaching their FRA.
When Neither Spouse has Claimed their Benefit
The Planner will automatically apply the spousal benefit on the date the higher earning spouse claims their benefit when it is advantageous to the couple.
To model this strategy, you do not need to make any adjustments. Simply enter the lower earning spouse's benefit at Full Retirement Age as reported by the SSA and the Planner will calculate and apply the appropriate amount.
For this to work, the lower-earning spouse's Social Security selection must be set in the future and cannot be set to "will not claim" or "already collecting" as this will stop all Social Security benefits from being modeled for the lower-earning spouse.
When the Lower Earning Spouse Plans to Claim their Own Benefit Prior to their Full Retirement Age and switch to the Spousal Benefit
Both claiming ages must be in the future and not already collecting.
Depending on the age of each spouse, some couples find that it is advantageous for the lower earning spouse to claim an individual benefit prior to their FRA, and change to the spousal benefit when the higher earner claims.
The amount the lower earning spouse will receive as a spousal benefit when the higher earning spouse claims their benefit is often less than 50% of the higher earner's FRA benefit as a result of claiming early. We recommend you verify this information by looking up your benefit information on the Social Security Administration website, www.ssa.gov or calling the SSA.
This image details the reduction:
The Planner will automatically apply the spousal benefit on the date the higher earning spouse claims their benefit when it is advantageous to do so.
To model this strategy, you do not need to make any adjustments. Simply enter the lower earning spouse's benefit at Full Retirement Age as reported by the SSA and the Planner will calculate and apply the appropriate amount.
When the lower earning spouse plans to claim their own benefit at Full Retirement Age and switch to the spousal benefit
Both claiming ages must be in the future and not already collecting.
Depending on the age of each spouse, some couples find that it is advantageous for the lower earning spouse to claim an individual benefit at their FRA, and change to the spousal benefit at when the higher earner claims.
The amount the lower earning spouse will receive as a spousal benefit when the higher earning spouse claims their benefit will be 50% of the higher earner's FRA benefit. We recommend you verify this information by looking up your benefit information on the Social Security Administration website, www.ssa.gov or calling the SSA.
The Planner will automatically apply the spousal benefit on the date the higher earning spouse claims their benefit when it is advantageous.
To model this strategy, you do not need to make any adjustments. Simply enter the lower earning spouse's benefit at Full Retirement Age as reported by the SSA and the Planner will calculate and apply the appropriate amount.
When one spouse has no work history
In the case that the lower-earning spouse has no work history and is not entitled to a Social Security benefit on their own work history but can claim spousal benefits, the lower-earning spouse's Social Security selection must be set in the future and cannot be set to "will not claim" as this will stop all Social Security benefits from being modeled for the lower-earning spouse. A value of $1 should be entered for their benefit at FRA and the claiming date should be the same as the higher earner. This will model them as not collecting benefits until spousal benefits kick in.
When one spouse has already claimed their benefit
How you model the spousal benefit depends on whether the higher-earning spouse has claimed yet.
If the lower earner has claimed but the higher earner has not:
Set the lower earner's claiming age to the same month and year as the higher earner's. Enter $0 for their FRA benefit, and Boldin will automatically model the spousal benefit when the higher earner claims. Then add the lower earner's current benefit as a pension until that date.
If the lower earner is over 70 and has already claimed, set their current benefit to $0 and follow the same steps.
If the lower earner's own FRA benefit is more than 50% of the higher earner's FRA benefit, they won't receive a spousal benefit. Enter their own FRA benefit instead.
If the higher earner has already claimed:
Boldin does not automatically calculate a spousal benefit in this case. This is a limitation of the model, so you'll need to model it manually. Enter the expected spousal benefit, in today's dollars, as that spouse's own Full Retirement Age (FRA) benefit. Then set their claiming age to when they plan to start receiving it.
Keep in mind:
Spousal benefits are reduced if they start before the spouse's own FRA. Because Boldin projects forward from today, it can't set a start date in the past.
Spousal benefits don't grow if you wait past FRA. Because you're entering the amount as the spouse's own benefit, set the claiming age no later than their FRA so the plan doesn't apply delayed retirement credits that wouldn't actually happen.
Survivor benefits are still modeled in both cases.
Where Can I view my Social Security Benefits?
See the Milestones Report for a narrative of your Social Security benefit and other important plan events.
You can view the combined benefits on your Lifetime Income Projection Chart by hovering over the Social Security benefits after both spouse's claiming ages. You can also view the combined benefits on your Insights > Income and Expenses > Estimated Income, Drawdowns, and Debt Chart. You may want to change the Social Security COLA to 0% and view the amounts without inflation. Please remember to change the COLA back after this experiment.
PRO TIP: If you would like to view the exact annual or monthly amounts the Planner is projecting for Spousal Social Security in your Plan, follow these steps:
Set your Social Security COLA to zero
Hover over the Lifetime Income Projection Chart until the 1st full year that both spouses will receive Social Security benefits
The total should be the annual amount of the higher earner’s benefit plus 50% of the higher earner’s FRA Benefit as the spousal benefit
Subtract out the higher earner's benefit, the remainder is the spousal benefit
If the lower earning spouse claimed prior to their own Full Retirement Age, they will receive less than 50% of the higher earner’s FRA Benefit, so the total will be the higher earner’s benefit plus 32.5% - 50% of the higher earner’s FRA Benefit
Please remember to change the COLA back after this experiment!
Deemed Filing Rule
Keep in mind that you may be subject to the “deemed” filing rule. This rule states that if the higher earning spouse is already receiving Social Security when the lower earner claims their benefits, the lower earning spouse is automatically “deemed” to be applying for spousal benefits if they are entitled to them. In this scenario the spouse doesn’t have the ability to wait and switch.
How to specify that you will not receive Social Security benefits
Use the pencil icon to edit back to the Social Security setup and press "No" when asked whether you expect to receive Social Security. See a video demonstration here.
Resource
Devin Carroll's Spousal Benefit Calculator