Will my business payroll setup affect my wife's future Social Security benefits when she's older?

This is an important question about how small business arrangements affect Social Security benefits. Your wife has a few options to consider: 1. Spousal benefits: Yes, she would be eligible for up to 50% of your Primary Insurance Amount (PIA) when she reaches her Full Retirement Age (FRA). 2. Build her own record: You could consider restructuring your business payroll to split income between both of you for the remaining years she'll work. She needs 40 credits (usually 10 years of work) to qualify for her own benefits. 3. Compare scenarios: If she can build a substantial earnings record, she might receive higher benefits on her own record versus spousal benefits, especially if your business is profitable. I recommend consulting with both an accountant who understands small business taxation AND a Social Security benefits specialist to create the optimal strategy given your specific situation.

my parents had this EXACT situation with their retail store!!! mom got almost nothing when dad passed because everything was in his name for 30 years. she only gets survivors benefits now which is way less than if shed had her own record. DEFINITELY switch ur wife to her own payroll ASAP!!!

I'm a retired accountant who worked with many small businesses. This is actually pretty common. You should immediately restructure your business to pay your wife properly. There's nothing illegal about changing your payroll structure - people do it all the time as they learn more about SS benefits. If she can earn enough in the next 10 years, she might qualify for her own retirement benefit. SS uses your highest 35 years of earnings, so she'd have many zeros averaged in, but 10 good years can still help. Also, don't forget to look at when you should claim your own benefits. Since you're already 67 (assuming that's your FRA), you could consider delaying until 70 to maximize your benefit, which would also increase any spousal or survivor benefits she might receive later.

To address the question about suddenly changing your payroll arrangement: No, the SSA won't view this as "gaming the system." Business owners adjust their compensation structures all the time for legitimate tax planning and retirement reasons. The key is to ensure the compensation is reasonable for the work performed. If your wife has genuinely been working in the business all along (which it sounds like she has), then paying her directly for that work is completely legitimate. Just document her roles and responsibilities clearly in case of any questions.

I spent HOURS on the phone with Social Security last month trying to figure out something similar for my parents' business. After getting disconnected four times and waiting almost 2 hours each time, I found this service called Claimyr that got me through to an agent in 20 minutes! You might want to check them out at claimyr.com - they have a video showing how it works here: https://youtu.be/Z-BRbJw3puU When I finally got through, the agent explained that my mom could still adjust their business structure even at age 59 to build some earnings. They recommended speaking with both SSA and a tax professional because there are important considerations for both retirement planning and current taxes.

Small business owner here who went through this exact situation. Here's what you need to understand: 1. Your wife needs 40 credits (usually earned over 10 years) to qualify for her own retirement benefit. In 2025, she needs to earn $1,740 per quarter to get one credit, max 4 credits per year. 2. When calculating her benefit, SSA will use her highest 35 years of earnings. Years with no earnings count as zeros in the average. So even with 10 years of good earnings, she'll have 25 zeros bringing down her average. 3. Despite those zeros, if your business is profitable and you can pay her a substantial salary, she might still earn more on her own record than the 50% spousal benefit. 4. Important: You need to actually restructure your business properly, with proper payroll taxes being withheld from her paychecks. Consult with a tax professional about proper methods to split income, as there are multiple options (W-2 salary, Schedule K-1 distributions if you're an S-Corp, etc.).

my neighbor went through this and she said dont forget medicare!!! your wife also needs those work credits for medicare part A to be free when she turns 65!!! otherwise shell have to pay like $500 a month for it!!!!

To answer your follow-up question about whether 10 years of $85,000 would be enough: That level of earnings could potentially give her a benefit higher than just the spousal benefit, despite the zeros. You can estimate this by creating a my Social Security account for her at ssa.gov and using the calculator. Enter her past earnings (zeros) and estimate future earnings at $85,000 for the next 10 years. Then compare that projected benefit to half of your benefit amount. With earnings that high ($85k), there's a good chance her own benefit would exceed the spousal benefit, especially if she waits until her Full Retirement Age (67) to claim.

wait isnt there a family business exception or something? i thought i read somewhere that spouses in family businesses get some kind of credit even if they werent on payroll. has anyone heard of this?

I think everyone is making this more complicated than it is lol. Just give her half the business income going forward and pay the taxes. My husband and I did this when I was 56 and I got enough credits for my own benefit by 66. It was better than spousal. Talk to an accountant but it's not that hard.

Thank you all for the helpful advice! I've scheduled a meeting with our accountant for next week to discuss restructuring our payroll. It sounds like it's definitely worth getting my wife on the books properly for these remaining years. I appreciate everyone sharing their experiences and knowledge - this has been really eye-opening for us.