What is the effect of taking your retirement early on spousal benefits?

Taking retirement benefits early can indeed reduce the spousal benefit amount that is available. When an individual claims Social Security retirement benefits before their full retirement age, their benefits are permanently reduced based on the number of months they claim early. This reduction also extends to any spousal benefits that are calculated based on that individual’s retirement benefits.

Spousal benefits are typically calculated as a percentage of the primary worker's benefit. Therefore, since early retirement results in a lower primary benefit, the spousal benefit derived from that primary benefit will also be affected, resulting in a reduced amount for the spouse.

Understanding this impact is crucial for both the primary worker and their spouse when planning retirement, as it highlights the importance of timing in claiming benefits and the potential long-term financial implications involved.