Social Security benefits can provide you with a reliable retirement income stream. Deciding when to receive benefits is an important issue, especially if you are married and hoping to qualify for spousal benefits. If you’re already receiving Social Security, you may be wondering if it’s possible to switch to a spousal benefit later. The answer depends on whether your spouse already receives Social Security benefits.
A financial advisor can help you understand what you’re eligible for and when is the best time to start receiving benefits as part of your comprehensive retirement plan.
How do Social Security spousal benefits work?
Calculating Social Security benefits for a married couple is a little different than doing so for a single person. When someone applies for Social Security benefits, their spouse may be able to apply for a spousal benefit. The benefit is based on your spouse’s contributions to Social Security and is limited to 50% of the benefit amount at full retirement age. For example, if they were to receive $2,200 per month at full retirement age, their spousal benefit would max out at $1,100 per month.
To receive Social Security benefits for spouses you must:
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Be at least 62 years old, the earliest age at which you can receive Social Security benefits OR
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Be the guardian of a child under 16 or a child receiving Social Security disability benefits
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Be married for at least one year to someone who has applied for retirement benefits
When you apply for spousal benefits, the Social Security Administration also calculates your benefits based on your job and earnings. If you are eligible to receive retirement compensation and spousal benefits, you will get the higher of the two.
If your spouse has not yet filed for retirement, you cannot get spousal benefits. You can, however, claim your pension benefits if you are at least 62 years old.
Signing up for Social Security at age 62 will reduce your benefit amount, below the amount you would be entitled to if you waited until you reached full retirement age. Delaying benefits until age 70, on the other hand, increases your benefit amount.
If you claim spousal benefits and file before full retirement age, your benefit amount will be approximately 30% instead of 50%. The only exception is if you are claiming spousal benefits and are a guardian of a child under 16 or a child with a disability.
Can I convert my Social Security benefit to a spousal benefit?
Switching from your regular retirement benefit to a spousal benefit is something you might be interested in if you’re hoping to maximize your Social Security benefits. Whether you can make this step depends on whether your spouse is already receiving benefits.
If your spouse is not yet receiving any retirement benefits, you could technically receive your regular Social Security benefit as early as age 62. When your spouse applies for benefits later, you may be able to switch to spousal benefits. This could potentially increase the total amount of benefits you receive as a couple if they wait until age 70 to start receiving benefits.
What if your spouse is already receiving Social Security benefits? In this situation the deemed deposit rule applies. That rule dictates that when someone applies for regular retirement benefits, he or she is also approved for spousal benefits if he or she is eligible to receive them. So, once again, you would get the higher amount of the two.
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Deposit withheld and spousal benefits
The Social Security Administration has implemented the presumptive filing rule to avoid double dipping. Before the rule, if spousal benefits were higher than an individual benefit, the individual could receive a combination of benefits equal to the higher benefit. The deemed filing prevents spouses from receiving one type of retirement benefit and at the same time benefiting from the delay of another type of benefit.
There are some exceptions to this rule, which would still allow you to claim spousal benefits regardless of your retirement benefit. You may be entitled to an exception if:
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They were born before January 2, 1954
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They are caring for a child under 16 or a child with a disability
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They are entitled to Social Security disability benefits
If you have already received retirement benefits and your spouse is receiving a spousal benefit, he or she may choose to switch to retirement benefits if he or she was born before January 2, 1954. In that situation, you may then be able to apply for an additional retirement benefit. spousal benefit in addition to your regular benefit once benefits take effect.
When should you apply for spousal benefits?
Timing is important when deciding when to file for spousal benefits. Again, taking benefits before your full retirement age can reduce the number of benefits you are entitled to receive. However, delaying spousal benefits past your full retirement age will not increase your benefit amount, as it would with regular retirement benefits.
When deciding how to time spousal benefits or retirement benefits, it’s helpful to look at the bigger picture and consider:
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Life expectancy and how long you and your spouse expect to rely on Social Security benefits
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Health and the possibility that one or both of you will require long-term care at some point
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Other sources of income, including investments, 401(k) or IRA, or money earned from part-time work or side jobs
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Retirement budget and estimated expenses
Living longer, for example, could make deferring Social Security benefits more attractive. On the other hand, if you don’t have enough savings and investments, sooner or later you may need the additional income that Social Security can provide you.
If you’re confused about when to take spousal benefits or whether you can convert your retirement benefit to spousal benefits, talking to a financial advisor can help. An experienced Social Security planning advisor can help you decide the right time to apply for these benefits.
The bottom line
You can convert your Social Security retirement benefit to spousal benefits if your spouse has not yet filed. Whether it makes sense to do so may depend on your current age and the age each of you applied for benefits.
As a general rule, the longer you can delay filing your Social Security application, the better, as this can result in a larger benefit amount.
Retirement Planning Tips
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Consider talking to your financial advisor about switching from retirement benefits to spousal benefits if your spouse plans to claim his or her own benefits. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. With SmartAsset’s free tool, it matches you with up to three financial advisors who serve your area, and you can interview your advisors for free to decide which one is right for you. If you’re ready, find an advisor who can help you reach your financial goalsit begins now.
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Talking to your advisor can also help you come up with a strategy for coordinating Social Security alongside other sources of income, such as a retirement plan, annuity, 401(k), or government retirement benefits. Deciding when to tap into each income stream can impact your tax situation, so it’s important to understand the best order to withdraw your assets. An advisor can also offer advice on how to apply for Social Security benefits as a former spouse if you are now divorced.
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