Should I switch from my Social Security benefit to a spousal benefit?

Social Security benefits can provide you with a reliable retirement income stream. Deciding when to receive benefits is an important matter, especially if you are married and hoping to qualify for spousal benefits. If you’re already on Social Security, you might be wondering if it’s possible to switch to a spousal benefit at a later date. The answer depends on whether your spouse is already receiving Social Security benefits.

A financial advisor can help you understand what you qualify 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 as a married couple is a little different than doing it as a single person. When someone applies for Social Security benefits, their spouse may be able to claim a spousal benefit. The benefit is based on the spouse’s social security contributions and is capped at 50% of the benefit amount at full retirement age. For example, if they were to receive $2,200 a month at full retirement age, their spousal benefits would cap at $1,100 a month.

To receive Social Security benefits for your spouse, you must:

• Be at least 62 years old, the earliest age to receive Social Security benefits, OR

• Be a guardian for a child under age 16 or a child receiving Social Security disability benefits

• Have been married for at least a year to someone who has filed for a pension

When you claim spousal benefits, the Social Security Administration also calculates your benefits based on your work and earnings. If you’re eligible to receive your retirement benefit and spouse’s benefits, you’ll get the higher of the two.

If your spouse has not yet filed for retirement, you cannot get spousal benefits. However, you can claim your retirement benefits if you are at least 62 years old.

Taking Social Security at age 62 will reduce your benefit amount, below the amount you would be entitled to if you had waited until you reached full retirement age. Delaying benefits until age 70, on the other hand, increases the amount of the benefit.

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If you claim spousal benefits and file before full retirement age, your benefit amount would be approximately 30% instead of 50%. The only exception is if you are applying for spousal benefits and are a guardian for a child under 16 or a child with a disability.

Can I convert my Social Security benefit into a spousal benefit?

Switching from your regular retirement benefit to a spousal benefit is something you may be interested in if you hope to maximize your Social Security benefits. Whether you can make this switch is determined by whether your spouse is already receiving benefits.

If your spouse is not yet receiving any retirement benefits, you could technically take your regular Social Security benefits as early as age 62. 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 that situation, the supposed deposit rule applies. This rule dictates that when someone applies for their regular retirement benefits, they are also approved for spousal benefits if they are eligible for them. So again, you would get the higher amount of the two.

Presumed deposit and spousal benefits

The Social Security Administration implemented the alleged filing rule to avoid double-dip. Before the rule, if the spousal benefits exceeded an individual benefit, the person could receive a combination of benefits equal to the higher benefit. The presumed deposit prevents the spouses from receiving one type of pension benefit, while also 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 pension. You may be eligible for an exception if:

• Born before January 2, 1954

• They take care of a child under 16 or a child with a disability

• They are entitled to disability benefits from the Social Security

If you have already received retirement benefits and your spouse receives spousal benefit, he may choose to switch to retirement benefit if he was born before January 2, 1954. In this situation, you could then claim an additional spousal benefit in addition to the your normal benefit once their benefits go into effect.

When should you apply for spousal benefits?

Timing is important when deciding when to apply for spousal benefits. Again, taking benefits before full retirement age can reduce the number of benefits you’re eligible to receive. However, delaying spousal benefits beyond full retirement age will not increase the benefit amount, as it would with regular retirement benefits.

When deciding how to plan spousal or retirement benefits, it helps to look at the bigger picture and consider:

• Life expectancy and how long you and your spouse expect to rely on Social Security benefits

• Health and the possibility that one or both of you will need long-term care at some point

• Other sources of income, including investments, 401(k), or IRAs, or money earned from part-time jobs or side jobs

• Retirement budget and estimated expenses

Living longer, for example, might make deferring Social Security benefits more attractive. On the other hand, if you don’t have sufficient savings and investments, you may need the additional income that Social Security can provide sooner rather than later.

If you’re confused about when to take spousal benefits or if you can switch your retirement benefit to spousal benefits, talking to a financial advisor can help. An experienced Social Security planning consultant can help you decide when is the right time to apply for these benefits.

The bottom line

You can convert your Social Security retirement benefit into spousal benefits if your spouse has not yet applied. Whether it makes sense to do so may depend on your current age and the age at which each of you filed for benefits.

As a general rule, the longer you can delay filing your Social Security claim, the better, as it can result in a larger benefit amount.

Retirement planning tips

• Consider talking to your financial advisor about switching from superannuation to spousal benefits if your spouse plans to claim their 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 connects you with up to three financial advisors serving your area, and you can interview your advisors for free to decide which one is right for you. If you are ready to find an advisor who can help you achieve your financial goalsit begins now.

• Talking to your counselor 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 draw on each income stream can impact your tax situation, so it’s important to understand the best order to draw assets. A counselor can also offer advice on how to claim Social Security benefits as an ex-spouse if you are now divorced.

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