SS Spousal Benefit & COLA Question

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Cernel
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SS Spousal Benefit & COLA Question

Post by Cernel »

My wife started her own SS benefit when she reached FRA at 66. I am currently delaying my SS benefit until I turn 70. When I apply for my benefit, my wife will then apply for Spousal Benefit (her FRA benefit is/was less than 50% of my PIA.). My question is: When she starts to draw the Spousal Benefit will the amount she receives be 50% of my PIA adjusted for the COLA over the past 4 years or will her Spousal benefit start at 50% of my PIA and then be adjusted as we move forward in time?
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David Jay
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Re: SS Spousal Benefit & COLA Question

Post by David Jay »

All These benefits are COLA adjusted based on age 62 of the person whose benefit is being used for the calculation.

If you are the same age, it doesn’t matter, the COLA is the same. But if there is an age difference then the starting “top-off” amount of the spousal will be based on your COLA, not her COLA.

Let me know if you want an example (for your respective ages).
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David Jay
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Re: SS Spousal Benefit & COLA Question

Post by David Jay »

One funky thing (to me, at least..) is that “PIA” is adjusted every year by the amount of the annual COLA. So your 2021 PIA is 1.3% higher than your 2020 PIA. Rather than adding a COLA to your age 62 PIA, the Social Security Administration incorporates it right into your number.

Your wife’s personal benefit continues after filing for spousal. She will receive a “top off” amount that is the difference between her personal benefit at the time of filing for spousal and 50% of your age 70 PIA (which includes all of your past COLA since age 62).

Her combined benefit amount will then be COLA adjusted each year going forward.
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Cernel
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Re: SS Spousal Benefit & COLA Question

Post by Cernel »

David,
Thanks for the info. I think I get it and just to confirm. My wife reached FRA of 66 in Dec 2017 at which time she started to draw her SS benefit. 8 months later (Aug 2018), I turned 66 (FRA) and started a Spousal benefit based on her benefit, thus delaying my benefit. I will turn 70 in Aug 2022 and will file for my benefit to start then. So if I understand correctly, my wife's Spousal benefit in Aug 2022 will be: my PIA at 66 * 2019 COLA of 2.8% * 2020 COLA of 1.6% * 2021 COLA of 1.3% * 2022 COLA of ?
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Re: SS Spousal Benefit & COLA Question

Post by vested1 »

David Jay wrote: Mon May 03, 2021 9:22 am One funky thing (to me, at least..) is that “PIA” is adjusted every year by the amount of the annual COLA. So your 2021 PIA is 1.3% higher than your 2020 PIA. Rather than adding a COLA to your age 62 PIA, the Social Security Administration incorporates it right into your number.

Your wife’s personal benefit continues after filing for spousal. She will receive a “top off” amount that is the difference between her personal benefit at the time of filing for spousal and 50% of your age 70 PIA (which includes all of your past COLA since age 62).

Her combined benefit amount will then be COLA adjusted each year going forward.
Nort meaning to nitpick, but unless I'm mistaken, PIA refers to Primary Insurance Amount which is the amount the claimant would receive at their full retirement age, adjusted every year for COLA if there is one. Your definition sounds like a PIA is established for age 62, 63 and so on. Everything is based on PIA, which isn't determined on when you file, but on the amount you would have received at FRA, even if you filed earlier or later.

I am in the same situation as the OP and exactly 1 year older than my wife. She filed on her 65th birthday when I turned 66 (FRA) and I filed a restricted benefit simultaneously for 1/2 of her PIA, even though she filed before FRA. She receives a lesser amount than she would have had she filed at FRA, and I receive more than half of what she receives because the benefit is based on her PIA, not on when she filed. In our case, when I file for my own benefit next year at 70 she will keep getting her own benefit because it is slightly less than my full PIA amount.

To answer the last question the OP asked. COLA raises are based on PIA, and so is a spousal benefit. COLA raises affect the amount of the PIA, so when one occurs the base amount of the PIA rises and the spousal benefit rises as well based on 1/2 of the increased PIA. The OP's wife will get a spousal benefit based on 1/2 of his PIA with all the ensuing year's COLA increases added to his PIA. Her spousal will continue to increase every year there is a COLA based on his PIA amount.

I hope that was clear enough.
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David Jay
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Re: SS Spousal Benefit & COLA Question

Post by David Jay »

vested1 wrote: Mon May 03, 2021 10:55 amNot meaning to nitpick, but unless I'm mistaken, PIA refers to Primary Insurance Amount which is the amount the claimant would receive at their full retirement age, adjusted every year for COLA if there is one. Your definition sounds like a PIA is established for age 62, 63 and so on. Everything is based on PIA, which isn't determined on when you file, but on the amount you would have received at FRA, even if you filed earlier or later.
I used to think that PIA was a fixed number, set one time. Mike Piper (author of "Social Security Made Simple" and creator of opensocialsecurity.com) corrected me, PIA changes by the COLA amount every year. So the PIA that Social Security published for me at age 62, in 2019 (and that I viewed on the website at that time) is no longer my PIA. If I ask SS for my PIA today, they will reply with a number that is higher by the amount of October 2019 COLA plus the October 2020 COLA. When I update my spreadsheet in early 2022, the PIA will again be higher, by the amount of the COLA that will be announced this coming October.

I don't wish to share my PIA, but I have tracked it in my financial spreadsheet and it does, in fact, change by the COLA percentage every year.
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David Jay
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Re: SS Spousal Benefit & COLA Question

Post by David Jay »

Cernel wrote: Mon May 03, 2021 9:48 am David,
Thanks for the info. I think I get it and just to confirm. My wife reached FRA of 66 in Dec 2017 at which time she started to draw her SS benefit. 8 months later (Aug 2018), I turned 66 (FRA) and started a Spousal benefit based on her benefit, thus delaying my benefit. I will turn 70 in Aug 2022 and will file for my benefit to start then. So if I understand correctly, my wife's Spousal benefit in Aug 2022 will be: my PIA at 66 * 2019 COLA of 2.8% * 2020 COLA of 1.6% * 2021 COLA of 1.3% * 2022 COLA of ?
You have the right idea, but that is her total benefit. Her personal benefit will continue unchanged and the spousal benefit - which is just the add-on - will be added as follows:

((Your PIA at 66 * 2019 COLA of 2.8% * 2020 COLA of 1.6% * 2021 COLA of 1.3% * 2022 COLA of "x") * 0.5) - (her personal 2022 benefit amount)

Here on BH we all talk about the spousal benefit as though it is 50% of your benefit, but this is not precise. The SSA only calls the add-on amount the spousal benefit.
Last edited by David Jay on Mon May 03, 2021 12:02 pm, edited 1 time in total.
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JoeRetire
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Re: SS Spousal Benefit & COLA Question

Post by JoeRetire »

Cernel wrote: Mon May 03, 2021 8:30 am My wife started her own SS benefit when she reached FRA at 66. I am currently delaying my SS benefit until I turn 70. When I apply for my benefit, my wife will then apply for Spousal Benefit (her FRA benefit is/was less than 50% of my PIA.). My question is: When she starts to draw the Spousal Benefit will the amount she receives be 50% of my PIA adjusted for the COLA over the past 4 years or will her Spousal benefit start at 50% of my PIA and then be adjusted as we move forward in time?
Since your PIA is adjusted for COLA every year, she will get 50% of your then-current PIA. Both her benefit and your benefit will then be COLA-adjusted each year going forward.
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David Jay
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Re: SS Spousal Benefit & COLA Question

Post by David Jay »

JoeRetire wrote: Mon May 03, 2021 12:02 pm
Cernel wrote: Mon May 03, 2021 8:30 am My wife started her own SS benefit when she reached FRA at 66. I am currently delaying my SS benefit until I turn 70. When I apply for my benefit, my wife will then apply for Spousal Benefit (her FRA benefit is/was less than 50% of my PIA.). My question is: When she starts to draw the Spousal Benefit will the amount she receives be 50% of my PIA adjusted for the COLA over the past 4 years or will her Spousal benefit start at 50% of my PIA and then be adjusted as we move forward in time?
Since your PIA is adjusted for COLA every year, she will get 50% of your then-current PIA. Both her benefit and your benefit will then be COLA-adjusted each year going forward.
That is so much simpler than what I said... :oops:
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Re: SS Spousal Benefit & COLA Question

Post by Cernel »

Appreciate the replies and the insight. I certainly have a better/clearer understanding of our situation.
Thanks
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Re: SS Spousal Benefit & COLA Question

Post by vested1 »

David Jay wrote: Mon May 03, 2021 11:42 am
vested1 wrote: Mon May 03, 2021 10:55 amNot meaning to nitpick, but unless I'm mistaken, PIA refers to Primary Insurance Amount which is the amount the claimant would receive at their full retirement age, adjusted every year for COLA if there is one. Your definition sounds like a PIA is established for age 62, 63 and so on. Everything is based on PIA, which isn't determined on when you file, but on the amount you would have received at FRA, even if you filed earlier or later.
I used to think that PIA was a fixed number, set one time. Mike Piper (author of "Social Security Made Simple" and creator of opensocialsecurity.com) corrected me, PIA changes by the COLA amount every year. So the PIA that Social Security published for me at age 62, in 2019 (and that I viewed on the website at that time) is no longer my PIA. If I ask SS for my PIA today, they will reply with a number that is higher by the amount of October 2019 COLA plus the October 2020 COLA. When I update my spreadsheet in early 2022, the PIA will again be higher, by the amount of the COLA that will be announced this coming October.

I don't wish to share my PIA, but I have tracked it in my financial spreadsheet and it does, in fact, change by the COLA percentage every year.
We said the same thing in different ways. Of course PIA changes every year with COLA, but is still the amount you would have received had you filed at FRA.
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Chip Munk
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Re: SS Spousal Benefit & COLA Question

Post by Chip Munk »

Now that I'm past my FRA, I can't seem to find my PIA anywhere in my account on the my social security website. Fortunately, I have been tracking my PIA myself by applying the annual COLA amount each year, but I like to verify it against the amount shown on the website. Instead of my PIA, it now displays something called my "benefit amount" which is my COLA-adjusted PIA increased by the delayed retirement credits I have earned as of the end of the prior year, so it's higher than my PIA.

It finally dawned on me that I can easily calculate my PIA by dividing the displayed "age 70 benefit" by 1.32 (my FRA is 66 years and 0 months, so my age 70 benefit is 32% higher than my PIA). I mention this in case anyone past their FRA who hasn't been tracking their PIA themselves needs an easy way to calculate it.
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