(bright music) Hi, I'm Derek McGinty and I'll be your host. Let's discuss how spousal benefits are calculated. Now, the content we'll share is intended as general guidance, it is not specific legal or financial advice. So please consult a financial advisor for any specific guidance according to your own individual situation. Now, you may already be aware Social Security takes care of spouses of workers, but it can get a little complicated. Social Security Thought Leader, Stephen Richardson's here to go over the basics for us, and then dig into some example scenarios. So Stephen, what are some of the qualifications to actually receive those spousal benefits? Well, as long as your spouse is already collecting benefits and you've been married for more than a year and you're 62 or older, you're likely entitled to receive spousal benefits through Social Security. You'll notice I said the word likely. There are certain qualifications that you and your spouse need to meet to be eligible for those benefits. So, let's take a look at them. First, you'll need to be the spouse of a worker who's eligible themselves to receive retirement, or disability benefits. So that means that your spouse needs to have been paying into the Social Security system long enough to qualify. Spousal benefits are available to wedded same-sex couples and to domestic partnerships in certain states. Non-citizen spouses who meet specific criteria can also qualify for them. Second, if you have been married to each other for at least 12 months. And third, your working spouse must file for their Social Security benefit before you can collect. So that's how you qualify. Let's talk money. If you're curious about how Social Security calculates how much money a spouse can collect, here's what you need to know. The Social Security Administration calculates the benefit for a spouse who's never worked by dividing the working spouse's Primary Insurance Amount in half. So a spouse who's never worked or hasn't worked enough to qualify for Social Security on their own, will get a benefit that is 50% of their spouse's Primary Insurance Amount. But what if both spouses worked enough to claim Social Security? That's a common scenario these days. If a spouse is eligible for a retirement benefit based on their own work history, Social Security will calculate both their spousal benefit, and the benefit based on their own work history, and pay the higher of the two. All right, thank you Steven. Now, if this sounds a bit confusing to folks out there, you are not alone. So, let's take a look at some examples. We'll look at a couple of different scenarios to illustrate just how much money spouses might be eligible to collect from Social Security, and how that can change with different life circumstances. Retirement benefits are designed so that you get the full benefit if you wait until Full Retirement Age. So let's take a look at a general example of how the monthly payout amounts change based on retirement age. The spousal benefit is half of the worker's Primary Insurance Amount if you begin collecting at your normal or Full Retirement Ages, and here's how that situation might translate into dollars. Let's imagine you're a non-working spouse and your working spouse's Primary Insurance Amount is $2,000 per month, to calculate your benefit, we take 50% of $2,000 to get a $1,000 base spousal benefit. So now let's imagine that you're a non-working spouse and you choose to receive spousal benefits before your Full Retirement Age. For example, if you choose to receive those benefits three years before your Normal Retirement Age, you would earn a spousal benefit of $750. But now what happens if both the working spouse and the non-working spouse decide to retire early? Well then, both of their benefits would be reduced. So, if the working spouse would've received $2,000 a month at their Full Retirement Age, and they retired three years early well then the benefit would be reduced to 80% and that would give them a new monthly benefit of $1,600. But there is some good news for the non-working spouse. Spousal benefits are not affected by the age at which the working spouse claims Social Security benefits. It will always be based on your spouse's Primary Insurance Amount. So, in this case, the non-working spouse's benefit would still be calculated starting from the working spouse's Primary Benefit of $2,000. Now, here's a look at the differences in monthly payout amounts by retirement age, and those differences can be significant. Now, let's look at the scenario of two working spouses. Let's say Spouse A qualifies for a Primary Insurance Amount of $2,000, and let's say Spouse B qualifies for their own Primary Insurance Amount of $800. Spouse B would also qualify for a spousal benefit of 50% of Spouse A's benefit, and that would be $1,000. So Social Security would pay Spouse B a spousal benefit of $1,000 instead of their own benefit of $800. Social Security does not add those two benefits together though; they pay only the higher of the two amounts. Now, let's briefly hear from Social Security expert, Jean Chatzky, about how divorce affects Social Security spousal benefits. Are you divorced and wondering if you can still receive Social Security spousal benefits? It's a question a lot of people have and the good news is that as long as you and your ex were married for at least 10 years, you can receive the same spousal benefit as a person who's still married. But there are some different rules depending on whether your ex-spouse is living and whether you've remarried. If your ex is still living, you can collect divorced spouse benefits if you're 62 or older and have not remarried. This is true even if your ex has not yet started collecting Social Security. If your ex has died, you can claim survivor benefits if you're 60 or older, or 50 if you're disabled, but if you remarry before you turn 60 or again 50 if you're disabled, you can't claim your ex's benefits. If you're curious about your own situation, you can use these spousal benefit calculator at ssa.gov/benefits/calculators and there you'll get an estimate of your own benefits, and I encourage you create your own mySSA to view your own Social Security information. If you still have questions or you need assistance, you can reach out to your local Social Security office by visiting ssa.gov/locator or calling 800-772-1213. For more information about Social Security, check out this website where you'll find lots of additional learnings about other Social Security topics and information about a variety of other issues including Medicare, caregiving and fraud. And finally, visit learn.aarp.org/socialsecurity, and while you're there, be sure to use the Your Questions Answered tool to browse the frequently asked questions. If you don't see what you're looking for, you can submit a question of your own and volunteer, Certified Financial Planner professionals from the Foundation for Financial Planning will answer every question submitted with a personalized response within 10 days via a private email. Thank you for watching.

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