Dear Carrie: While I am still employed, can my nonworking wife retire and receive Social Security benefits? -- A Reader
Dear Reader: There's a lot of confusion about whether or not a nonworking spouse is entitled to Social Security benefits, so I'm glad you asked this question. The short answer is that a nonworking spouse who has reached age 62 can collect Social Security based on the working spouses earning's record, once the working spouse has filed for benefits.
You say that you're still employed, so I'm going to assume that you're not collecting Social Security yet. I'm also going to assume, for the sake of simplicity, that your wife doesn't qualify for her own benefits. (If she did, she could file in her own name regardless of your filing status once she turned 62.) If my assumptions are accurate, while your wife may be eligible for Social Security benefits, she can't collect until you file for benefits yourself.
This sounds clear enough, but as with so much that has to do with the government and money, there are a number of rules and exceptions to complicate things a bit.
WHAT AND WHEN A NONWORKING SPOUSE CAN COLLECT
The Social Security benefit of a nonworking spouse is 50 percent of the full benefit of the working spouse. So if your full benefit is $2,000, your wife would be able to collect $1,000. However, the age limits that apply to worker benefits also apply to spousal benefits. There are two choices. Your wife can:
-- Take Social Security at age 62. But the 50 percent spousal benefit would be further reduced by about 25 percent for the rest of her life.
-- Wait until what the IRS designates as her "full retirement age" (between 65 and 67, depending on when she was born) to receive the full spousal benefit. In this case, she will receive 50 percent of your full benefit.
Just for the record, there is an exception to the age requirement if your spouse is caring for your child who is under age 16.
WHY TIMING IS IMPORTANT
Both you and your wife should give a lot of thought to when to begin collecting Social Security. For instance, if you applied early at age 62, your benefit would be permanently reduced. If your wife also elected to take Social Security early, her 50 percent benefit would be permanently reduced. That could make a big hole in your monthly income.