Is there a Social Security marriage penalty?

[PayThePiper]

I did a quick search for social security of this excellent website and did not find my topic covered. If my question has been answered already or I am posting this in the wrong forum, please point me in the right direction.

I am trying to assist my married friends determine how much they will need to retire. I need help determining what they can expect from social security. They are both around 55 years of age and have been working/contributing to social security in excess of 30 years, making approximately the same amount for all their married life. Joe did the social security caluclator on the SSA website. It shows "Estimated Benefit at Full retirement age (66 and 8 months)" of $1,978 per month. I assume Jane's will be about the same. Now, my question...If they both retire at approximately the same time, will they both recieve the estimated benefit (say $1,978 times two or $3,956) or will social security discount one of them since they are married. How can I estimate the amount social security will pay the couple when they reach full retirement age?

Any and all help is appreciated!!!

[marvholly]

As I recall each has the 'option' to either take their own earned bennies or a spousal benefit of 50% of the other spouses.

In this case they are WAAAY better off if each takes their own.

[PayThePiper]

Thanks!!! I retired with a pension from the State of Louisiana and do not have the necessary quarters to benefit from social security. With both spouses drawing from their individual work experence without a marriage penalty, they will have a good start to an adequate retirement in 10 years!!! Hoping congress doesn't "fix" social security for those close to retirement!

[marvholly]

From what I recall reading (especially during the election campaigne) even the Ryan plan (and similar) was to be for those UNDER 55 - maybe = to 55 and under.

[PayThePiper]

Thanks for your response....and yes, I sort of borrowed the phrase "marriage penalty." In this instance, I am referring to whether both spouses receive the same amount of SS benefit as they would receive if they were single. Sorry for the confusion..

jr

[Money? What Money?]

Clarification

PayThePiper,

I know this thread is a bit old, but I wanted to provide some information about your question, just in case someone else searches and finds this thread.

There is no marriage penalty. The way SS works is that each person who works and pays SS taxes becomes eligible for a benefit based upon their own work history. In your example, husband will get XXXXX amount based upon his record and wife will get XXXX amount based upon her record. This would be the case regardless if they are married or not.

I would argue that because they're married, they have many more options. A person is eligible for up to 50% of their spouse's SS, unless 100% of their own benefit is more than 50% of their spouses, in which, they wouldn't get a benefit from their spouse, just their own.

Let's say Tom and Sue are married. Tom's full SS is $1,000 and Sue's full SS is $400. Sue is eligible for up to 50% of Tom's or $500. So, Sue would take her own $400 and would get an extra $100 from Tom, bringing her total monthly benefit to $500. Tom would still get his $1,000, so the combined amount is $1,500. If they were not married, but living together, Tom would get his $1000 and Sue would get her $400 (since they aren't married she doesn't qualify for the difference from his record) and their total monthly would be $1,400.

Now, if you take the same scenario as above, Tom gets $1000 but Sue's is now $600. Since 100% of Sue's is more than 50% of Tom's, Sue would get her own $600 and nothing from Tom. Their combined amount is $1,600. If they weren't married they would still get $1,600 total.

So you can see there is no penalty for being married. This doesn't even take into account the benefits Sue would receive if Tom passes away first and they were married at the time. Sue would be eligible for up to 100% of what Tom was getting when he passed away, so her $500 (combined rate) would turn into $1000. If they weren't married, she would get her $400 only.

I've already typed enough, but there are some other options that open up to a couple if they are both at least their full retirement age when they apply, like filing and suspending to allow for one spouse to get 50% while they both receive delayed retirement credits (8% increase) on their own benefits per year until age 70.

If you're interested in more details, social security's website is a good resource for information.

I hope this answers your questions, or at least the person that stumbles upon this thread from a search on the topic.

[Money? What Money?]

As I recall each has the 'option' to either take their own earned bennies or a spousal benefit of 50% of the other spouses.

In this case they are WAAAY better off if each takes their own.

Just to clarify, they only have the option to take either their own or 50% of their spouses if they are their full retirement age. If they file before their full retirement age, they must take their own benefit first, then if their own is still less than 50% of their spouses, they would apply for the difference off of their spouse's record.