Reading time: 5 minutes
Published: December 1, 2024
Modified: January 13, 2025
Social Security is a cornerstone of retirement planning, yet its rules are often misunderstood. Many people believe that switching spousal and individual plans is a simple way to maximize payments, but this isn’t always true. Let’s clarify the rules, common misconceptions, and how you can make the most of your benefits.
Key Takeaways
- Switching Between Benefits Has Limits: Social Security’s deemed filing rule prevents most people from claiming spousal benefits first and switching to their own individual benefit later.
- Delayed Credits Boost Benefits: For those born before January 2, 1954, filing a restricted application at Full Retirement Age (FRA) to claim spousal benefits allowed their individual benefit to grow with delayed credits, potentially increasing monthly payments when they later switched to their own benefit.
- Proactive Reviews Pay Off: The SSA doesn’t automatically reassess your benefits in all situations, though it might do so under certain circumstances. Proactively reviewing your Social Security options can help uncover missed opportunities.
How Social Security Handles Individual and Spousal Benefits
When you apply for Social Security, the deemed filing rule ↗ applies if you were born on or after January 2, 1954. This rule means that when you file for benefits, you’re automatically considered to be applying for both your own (individual) and spousal benefits if eligible. Social Security will calculate both and pay the higher amount.
- You cannot claim spousal benefits first and then switch to your own individual benefit later. This strategy was only available to those born before January 2, 1954.
- If your individual benefit is higher than your spousal benefit, you’ll automatically receive the individual amount.
For married couples, the deemed filing rule limits flexibility. However, beneficiaries born before January 2, 1954, had the option to file a restricted application at FRA, allowing them to claim only spousal benefits while letting their individual benefit grow with delayed credits.
Example 1: Restricted Application for Spousal Benefits
Scenario
Anna, born in 1953, reached her Full Retirement Age (FRA) of 66 in 2019. At FRA, she filed a restricted application to claim only spousal benefits based on her husband Jack’s Primary Insurance Amount (PIA) of $2,000. She received $1,000 per month in spousal benefits (50% of Jack’s PIA) while allowing her individual retirement benefit to grow with delayed retirement credits, earning an 8% increase per year.
By 2023, Anna turned 70 and became eligible for her higher individual benefit of $1,320 per month. However, she didn’t realize this until six months after her 70th birthday. When Anna contacted the SSA to switch to her individual benefit, they approved the adjustment and provided retroactive payments for the difference between her spousal and individual benefits for the previous six months.
Outcome
Anna received a lump sum retroactive payment for six months of the difference between her spousal benefit ($1,000) and her individual benefit ($1,320), totaling $1,920 ($320 x 6). Going forward, her monthly benefit increased to $1,320.
Key Considerations
- Retroactive payments are generally limited to six months from the date you apply for an adjustment.
- Anna’s example illustrates the importance of reviewing your benefits regularly, as the SSA may not notify you automatically about changes that could increase your payments.
Example 2: Switching from Individual to Spousal Benefits
Scenario
David, born in 1958, claimed his individual benefit early at age 62, receiving $800 per month. When his spouse, Mary, filed for her benefits at age 70 in 2024, David became eligible for spousal benefits based on Mary’s PIA of $2,800.
Outcome
David’s total benefit equals $1,400, which is 50% of Mary’s PIA.
Key Considerations
- Spousal benefits may become available after a spouse files for their benefits, making it worthwhile to reassess eligibility if your spouse has delayed claiming.
- Claiming your own benefit early doesn’t affect your eligibility for spousal benefits, but it’s important to understand how your total benefit is calculated.
Can You Get Retroactive Payments?
If the SSA identifies that you’ve been underpaid, you may qualify for retroactive payments, but there are limitations:
1. Six-Month Limit: Retroactive payments generally cover up to six months before you apply for an adjustment.
2. Exceptions: Certain cases, like administrative errors or disability, may allow retroactive payments beyond six months.
For example, if Anna delayed switching to her individual benefit by more than six months after turning 70, she would still only receive retroactive payments for the most recent six months.
What Should You Do?
1. Understand Your Eligibility: Check whether you qualify for spousal benefits, individual benefits, or both.
2. Review Benefits Regularly: Contact the SSA to confirm you’re receiving the highest possible payment.
3. Consult a Financial Advisor: An expert can help you navigate complex Social Security rules and strategize for maximum benefits.
Final Thoughts
Social Security’s rules can be complex, but understanding them is crucial for optimizing your retirement income. Whether you’re navigating individual or spousal benefits, proactive planning makes all the difference.
If you uncover a way to increase your Social Security benefits, consider how you can be a good steward of these newfound gains. Whether you use them to cover essential expenses, invest for the future, or support loved ones, maximizing your benefits can lead to greater financial security and peace of mind.
Before making any changes, consult a financial advisor and visit the SSA’s Retirement Planner ↗ for detailed guidance.
To learn move about delaying retirement to increase your benefits, see Delayed Retirement Credits ↗.
For more information about Social Security, check out these blogs on Raining Pennies:
- The Social Security Break-Even Calculator You Need
- Social Security and Medicare Changes for 2025: What You Need to Know