Ask the Expert: Taking Social Security benefits before full retirement age

My wife is 62 and wants to take Social Security based on her employment record. I'm 65 and will wait until I'm 68 to collect benefits. I know she can then be transferred to a spousal benefit on my account. What percentage of my benefit will she get?

If your wife takes Social Security at 62, her own benefit and her spousal benefit will both be smaller than if she applies when she's 66 years and 8 months old, which is her full retirement age (FRA).

If you delay Social Security three years past your FRA, you'll get an extra 8% a year. But that boost isn't reflected in her spousal benefit. Her maximum potential spousal benefit is 50% of your benefit at FRA, known as your primary insurance amount (PIA).

Let's say her own PIA is $1,000 a month. If she takes it at 62, 'she'll get only 71.7% of $1,000, or $717.

Let's say your PIA is $2,500, so her maximum potential spousal benefit is $1,250.

If she takes her own benefit now at 62, here's how the Social Security Administration will determine her spousal benefit in three years: Her own PIA amount ($1,000) will be subtracted from her maximum potential spousal benefit ($1,250). The result is $250. That $250 will be added to her $717 benefit. Her new benefit check will be for $967.

If she waits until she reaches her FRA to collect Social Security, her spousal benefit will be determined the same way, yet she'll get a substantially bigger amount. Again, her $1,000 PIA will be subtracted from her maximum spousal benefit. But in that case, the $250 difference will be added to her own unreduced $1,000 PIA — and she'll get $1,250.

The bottom line

Taking Social Security early reduces your own benefit and your spousal benefit.

More information

ssa.gov/benefits/retirement

ssa.gov/benefits/retirement/planner/otherthings.html