Question of the Month – Turning on Social Security Benefits

By Admin Prepare

February 10, 2021

“My husband has worked a lot in his life and has a pretty high Social Security estimate.  My Social Security estimate is not as high as I took several years off from employment to take care of our family.  We are getting ready to turn our Social Security benefits on, and I heard that I could delay taking my benefit and let it grow while I take a spouse benefit off of my husband’s record.  Am I able to do that?  Thank you.”  Deborah

Hello Deborah.  There are a lot of ways and options to turn on Social Security benefits.  The key to maximizing your benefits is to know when and how to do this the most proper way for your specific situation.  Unfortunately, many people do not understand their options correctly and make mistakes, which costs them a lot of money over their lifetimes. 

The rules for claiming Social Security are not exactly straightforward.  The mistakes made in making wrong decisions regarding when and how to elect your Social Security benefits stem from complicated rules and options. This is especially the case when it comes to spousal benefits. 

Social Security does allow a married person to claim benefits on their own record or their spouse’s record.  The most you can get under a spousal benefit is 50% of their primary insurance amount, which is the amount they’d qualify for at full retirement age. But, for those people with little work history, this amount that can lead to a substantially higher benefit than their own benefit.  However, there are some rules regarding spousal Social Security benefits that you must know and understand. 

First, you can earn delayed credits on your own benefit, but only up to your full retirement age.  It does not continue to earn delayed credits up to age 70 like a personal benefit.  So, if you use your spouse’s record, your benefit maxes out at your full retirement age, which is 66 or 67 for most people.

Next, in order to get the full 50% benefit off of a spouse’s record, you have to be at your full retirement age.  If you take the spousal benefit before then, that percentage will be lower and could be as little as 32.5%.

Finally, you can only take a spouse benefit and then switch to your own higher benefit at a later date, if, you were born on or before January 2nd, 1954.  This is known as filing a restricted application.  Unfortunately, the Bipartisan Budget Act of 2015 eliminated this option and now is only available for those who are grandfathered in, or for those who care for a disabled child under 16, or you’re eligible for both spousal benefits and disability benefits.

Deciding when and how to elect Social Security benefits is a critical decision that requires education on all the rules and your options.  To gain valuable information and education on Social Security, as well as other areas of retirement planning like income, tax and estate planning, visit the Prepare Institute website and find a retirement course or class near you. 

Content is for educational and informational purposes only.  It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should contact your retirement and tax professional before utilizing any of the information in this article.