Social Security benefits can be very complicated. That's because you can sometimes claim benefits not only based on your own work record but also based on the earnings history of a current spouse, a former spouse, or a spouse who passed away. There are also different kinds of benefits, including retirement and disability benefits.
The money the Social Security Administration provides can be an important source of income or even your only source -- so you need to know how to maximize it. This guide to managing multiple benefits can help you better understand when and how you can choose between different programs administered by the SSA to get the most money possible.
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Understanding different types of Social Security benefits
Different types of Social Security benefits include the following:
- Retirement benefits: This benefit is intended to replace part of your income in retirement. The retirement benefit becomes available as early as the age of 62; however, if you delay claiming it, you can increase your benefits up until the age of 70.
- Disability benefits: These are available through the Supplemental Security Income (SSI) program or through the Social Security Disability Insurance program (SSDI). SSI benefits are needs based, so only people with few financial resources and limited incomes qualify. SSDI benefits are not restricted to low-income recipients, but you must have earned sufficient work credits to receive them or must qualify on a family member's work record. You might become eligible for disability benefits at any age, but you must meet a very narrow definition of "disabled" required to qualify.
- Spousal benefits: If you're currently married or are divorced after being married for at least 10 years, you could potentially qualify for benefits based on your current or former spouse's work history. If you're not divorced, you won't become eligible for Social Security retirement benefits until you're 62 or older and until your spouse has claimed his or her own retirement benefits. And waiting until after age 62 to claim them can increase these benefits. However, if you're raising a dependent child who is under 16 or disabled, it may be possible to obtain spousal benefits earlier. And if you've been divorced at least two years, you can claim your spousal benefits regardless of what your ex is doing.
- Survivor's benefits: Surviving spouses and/or children of a deceased worker may be entitled to these benefits based on a deceased worker's earnings history. Widows or widowers must be 60 or over to claim survivor's benefits, or 50 or over if disabled. Widows/widowers can increase their survivor's benefits by waiting longer to claim them. But there's no age limit for claiming survivor's benefits if you're caring for a dependent child who is under the age of 16.
How retirement benefits are calculated
Retirement benefits are calculated based on your work history.
- The Social Security Administration adjusts your wages for inflation for each year you worked, then adds up your annual wages in the 35 years when your earnings are highest. This number is divided by 420 (the number of months in a 35-year career) to figure out your Averaged Indexed Monthly Earnings (AIME).
- Your AIME is used to determine your Primary Insurance Amount (PIA) or the amount you'd receive at full retirement age (FRA, which is between 65 and 67 depending on your birth year). Your PIA is calculated by giving you benefits equal to a percentage of AIME. You can learn more about this formula in our guide to how much Social Security pays you.
- If you claim benefits prior to FRA, your monthly benefit is reduced by a specific percentage for each month you're early. If you claim after FRA, your benefit is increased by a specific percentage for each month you delay. You can find out more about these percentages in our guide to how Social Security changes your monthly payment based on when you file.
How disability benefits are calculated
If you receive benefits through Supplemental Security Income (SSI), your benefit is set based on a maximum federal benefits limit. In 2019, for example, the maximum monthly benefit an individual could receive would be $771. The limit changes annually, and you can find the current limits on the SSA's website. If you have earned or unearned income, your monthly benefit will be reduced based on your earnings. Some states also supplement your SSI benefits.
Social Security Disability Insurance benefits, on the other hand, are based on your work history. The SSA determines the number of years of work history that count by:
- Subtracting 22 from your current age. For a 40-year-old disabled worker, this would be 40 - 22 or 18.
- Taking 1/5 of that number and rounding down to the nearest whole number. In our example, 1/5 of 18 rounded down, or 3.
- Subtracting the second number from the first. If the second number is more than 5, the SSA subtracts 5 instead. If it's less than 2, the SSA subtracts 2 instead. The number in this case is more than 2, so the SSA would subtract 3 from 18 to get 15.
The SSA would adjust wages for inflation, determine your Average Indexed Monthly Earnings (AIME) over the applicable number of years, and would determine your benefit amount by giving you credit for a certain percentage of AIME. You can learn more about this formula in our guide to Social Security Disability Insurance.
How spousal benefits are calculated
Spousal benefits are based on your spouse's primary insurance amount and the age at which you claim benefits.
- You are entitled to receive half of your spouse's PIA if you claim your spousal benefit at your full retirement age.
- If you claim your spousal benefit prior to your FRA, your benefits will be reduced for each month early you claim.
- If you're younger than 62 and claim spousal benefits while caring for a child under the age of 16, you won't receive a reduction in your benefit for as long as that child is under 16.
There is no benefit to delaying beyond your full retirement age to claim spousal benefits because you don't see an increase in your income by delaying. The maximum you can get when receiving benefits on your spouse's work history is 50% of his or her primary insurance amount.
Remember, retirement benefits based on your spouse's work record cannot be claimed until after your spouse has claimed his or her own retirement benefits -- unless you have been divorced for at least two years.
How are survivor's benefits calculated?
The amount of survivor's benefits is determined based on your relationship with the deceased and, in some cases, your age when you claim.
- Widows or widowers who claim survivor's benefits at their own FRA or later will receive 100% of the deceased worker's benefit amount.
- Widows or widowers who claim survivor's benefits between the ages of 60 and their FRA will receive between 71.5% and 99% of the deceased's benefit.
- Disabled widows or widowers between the ages of 50 and 59 will receive 71.5%.
- Widows or widowers of any age caring for a dependent child under 16 will receive 75%.
- Children under 18 or disabled children will receive 75%.
- Dependent parents of the deceased worker who are 62 or older could each receive 75% if there are two surviving parents or 82.5% if there is one surviving parent.
If the deceased worker claimed benefits before passing away and had claimed prior to FRA, survivor's benefits are based on the larger of 82.5% of the deceased's primary insurance amount or the deceased's actual benefit. If the deceased began benefits at FRA or after, survivor's benefits are based on the benefit the deceased was receiving, including delayed retirement credits.
If the deceased wasn't receiving benefits before passing, survivor's benefits are based on the deceased's PIA. If the deceased already hit his or her FRA and hadn't yet claimed benefits, survivor's benefits are based on what the deceased would've received at the date of death, including any delayed retirement credits earned to that point.
Can you receive multiple Social Security benefits?
You might qualify for multiple Social Security benefits. For example, you might be eligible for Social Security benefits based on your own work record and for survivor's or spousal benefits based on a current or former spouse's work history.
Unfortunately, if you're entitled to multiple benefits, you don't generally get both combined. For example, if you're entitled to a $1,000 benefit based on your work history and you're also entitled to a $1,500 survivor's benefit, you don't get $2,500 per month from the Social Security Administration. Instead, SSA will pay you the higher of the benefits. So you'd only get that $1,500 survivor's benefit.
However, there's one exception if you're entitled to both Supplemental Security Income (SSI) and retirement benefits. You're allowed to receive SSI and Social Security retirement benefits simultaneously if retirement benefits don't push your income above the limit for the needs-based SSI program. In 2019, if retirement benefits don't exceed $791 and you have no income from other sources, you could receive both SSI and retirement benefits. However, your retirement income reduces your SSI benefits on a dollar-for-dollar basis, so $650 in monthly retirement benefits would cut your SSI benefits by $650.
Can you choose which Social Security benefits you receive to maximize your income?
Generally, you cannot choose which Social Security benefits you receive. That's because of deemed filing.
Under deemed filing rules, when you file for any benefits, you're assumed to be filing for all benefits to which you are entitled. However, there are a few limited situations in which it's possible to choose which benefits you apply for to maximize what you receive. We'll look at each of these strategies in detail, but here is a summary of them:
- If you were born prior to Jan. 2, 1954, you can file a restricted application to claim only spousal benefits at full retirement age. This would allow you to wait to claim your own benefits until age 70 to earn delayed retirement credits that increase your monthly Social Security income.
- If you are entitled to your own benefits as well as to survivor's benefits, you can file a restricted application to claim survivor's benefits only. This also allows you to delay filing for your own benefits. Unlike for spousal benefits, you can still use this strategy even if you were born after Jan. 2, 1954.
- If you have not yet reached full retirement age and you meet the definition of disabled, you can apply for Social Security Disability benefits instead of applying for retirement benefits -- even if you're 62 and could retire. Doing this allows you to avoid penalties that apply if you claim retirement benefits prior to full retirement age.
Filing a restricted application to claim spousal benefits
Social Security previously allowed a strategy called a file first as a spouse strategy. This only applies to anyone who was born in 1984 or before. The strategy involves filing a restricted application to claim spousal benefits after hitting FRA but not filing for your own benefits based on your work record.
Using this approach, you could start receiving benefits based on your spouse's work history at your FRA and continue earning delayed retirement credits to boost your own benefit.
For example, say your primary benefit amount based on your work record would entitle you to a $1,000 monthly Social Security check. Or you could claim spousal benefits on your spouse's work history based on your spouse's primary insurance amount of $2,000 per month. Your spousal benefits, remember, equal 50% of your spouse's PIA, so you'd be entitled to a $1,000-per-month spousal benefit.
At FRA, you could file a restricted application and claim the $1,000-per-month spousal benefit. You could delay filing for your own benefits until the age of 70, which, as explained above, will enable you to raise your own benefits by earning delayed retirement credits. Delayed retirement credits are worth as much as an 8% annual increase in your monthly benefit amount, so this strategy could result in your benefits going up significantly for each year you delay until age 70.
However, during budget negotiations in 2015, changes were made to Social Security rules to eliminate the option to file first as a spouse. Changes were grandfathered in when the Bipartisan Budget Act of 2015 passed. Anyone who had first become eligible for Social Security in 2016 or earlier wasn't subject to the new limitation, meaning this option only remains open to anyone who was born in 1954 or before. If this applies to you, you can still take advantage of this technique -- but most others no longer have this option.
And because everyone eligible for SSA retirement benefits in 2016 will hit their FRA by 2019 (if they haven't already), this is the last year in which this strategy remains a viable option.
Filing a restricted application to claim survivor's benefits
The changes that were made in 2015 didn't apply to survivor's benefits. You can still file a restricted application to receive only survivor's benefits, enabling you to delay claiming your own benefits until you reach the age of 70. This allows you to maximize the benefits you receive on your own work record by earning the maximum possible delayed retirement credits.
Filing for disability instead of retirement benefits
Many people who become unable to work after the age of 62 because of health issues will simply default to claiming Social Security retirement benefits. Doing so is easier than trying to go through the process of qualifying for Social Security Disability Insurance benefits.
However, by filing for retirement benefits at 62, you become subject to the early filing penalty that reduces monthly income. If you instead claim Social Security Disability benefits, you won't be subject to this penalty. And you become eligible for a disability freeze, which allows you to avoid averaging in any low earning years caused by your disability when determining AIME.
If you're able to successfully claim Social Security Disability, you'll continue receiving SSDI benefits -- as long as you still meet the definition of disabled -- until you hit FRA, when benefits are automatically converted to retirement benefits.
You have more options for juggling multiple benefits if you and your spouse coordinate
If you are married and both spouses are alive, you and your spouse can coordinate together to try to maximize the combined Social Security income you both receive. There are a number of strategies to do this, including:
- Having the lower-earning spouse claim benefits first and the higher-earning spouse wait to claim until as late as possible in order to earn delayed retirement credits and maximize survivor's benefits.
- Having a higher-earning spouse claim retirement benefits at a younger age in order to enable his or her spouse to begin receiving spousal benefits and/or to enable children to begin receiving dependent benefits.
Previously, it was possible to use a file and suspend strategy to maximize benefits. Under this strategy, the higher-earning spouse would file for benefits to enable spousal benefits to begin -- but would then suspend his or her own benefits claim. This enabled the higher earner to avoid a big reduction in benefits resulting from early claiming while still making spousal benefits available. However, this strategy is no longer permitted.
Will the family maximum affect you?
Sometimes, multiple people in one family receive Social Security benefits on the same work record. This could occur, for example, if:
- A widow and multiple dependent children qualify for survivor's benefits on the work history of a deceased spouse.
- A disabled worker has both a spouse and children who qualify for SSDI benefits for dependents.
When multiple family members qualify for benefits on the basis of one person's work record, the Social Security Administration limits the total benefits that all family members can receive. This limitation is called the family maximum, and there are different formulas depending on whether the benefits are being paid under the Social Security Disability program or Social Security's program for retirees and surviving dependents, called the Old-Age and Survivors Insurance (OASI) program.
When benefits are paid under the Social Security Disability program, the maximum family benefit is generally 85% of the worker's average indexed monthly earnings. However, the maximum family benefit can't be below 100% of the worker's primary insurance amount or above 150% of PIA.
When benefits are paid under OASI, the maximum family benefit is calculated based on a specific percentage of the worker's primary insurance amount, with the percentage changing at various income thresholds called bend points. For 2019, the family maximum for OASI benefits is:
- 150% of the first $1,184 of the worker's PIA +
- 272% of the worker's PIA above $1,184 up to $1,708 +
- 134% of the worker's PIA above $1,708 up to $2,228 +
- 175% of the worker's PIA over $2,228.
The percentages always stay the same, but the bend points or income thresholds at which the percentages change will differ from year to year. You can find bend points for the current year on the Social Security Administration's website. This formula generally results in a family maximum equaling 150% to 180% of the worker's primary insurance amount.
Unfortunately, the family maximum means anyone who is part of a family in which multiple people receive benefits on one person's work record may end up receiving a lower benefit than they'd be entitled to if they were the only one getting benefits on that earnings history. When calculating Social Security benefits available to live on, take the family maximum into account.
Now you understand more about juggling multiple benefits
Now you can make a more informed decision around claiming multiple Social Security benefits and how to maximize the benefits you receive if this is your situation. Making the best choices to increase your Social Security income is important so that you and your loved ones may receive the full benefits to which you're entitled.
