Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation is advised to sit down with a financial counselor to review options. Some of the major factors that could impact this decision are the life expectancy of the spouse and recipient, the age of retirement and living expenses.
Retroactive Social Security Benefits
Spousal Social Security benefits are retroactive and can be paid via a lump sum when the file-and-suspend strategy is used. When this option is used, the couple can retroactively receive benefits from the time of filing.
This strategy is a hedge against some sort of health scare or change in life circumstances that requires lots of money. If this step is taken, the couple retroactively receives primary and spousal benefits that would have been paid out if they had been receiving monthly payments the whole time. However, the couple is then ineligible for the increased Social Security payments that are made when they receive benefits at the age of 70.
Spousal Social Security benefits allow one spouse to file for benefits while the other spouse receives a benefit based on the filing spouse's benefit. The maximum a spouse can receive is half of the filing spouse's full benefits at the full retirement age.
For most couples, the optimal balance is for both spouses to file for Social Security at the full retirement age and have the spousal Social Security benefit make up the difference. Spouses are entitled to collect 50% of Social Security benefits; however, this requires both spouses to file for Social Security even if they do not intend to collect.