Understanding Retroactive Spousal Social Security Benefits
Spousal benefits are an important and frequently used Social Security resource. In some cases, so are retroactive benefits. Retroactive spousal Social Security benefits, however, are quite complicated. Anyone who believes they might be entitled to these benefits should meet with a financial counselor to review their options.
Some of the major factors that could impact receiving these benefits retroactively are the life expectancy of the spouse and recipient, family structure, and age of retirement.
- Social Security spousal benefits pay a beneficiary's spouse in retirement.
- A retroactive benefit is a lump-sum payment of up to six months' worth of Social Security benefits paid for late claimants.
- Spousal benefits may be retroactive, but only under certain limited circumstances.
Retroactive benefits are a one-time payment the Social Security Administration (SSA) can send to those who delay filing for retirement benefits for up to six months beyond their full retirement age (66 for many, 67 for those born in 1960 or later). In other words, if you file for benefits after you've reached your full retirement age, you can take a lump sum of up to six months of benefits that accrued between your full retirement age and your filing date.
The lump-sum payment is appealing but comes with a stern condition: The benefit recipient's filing date is pushed back, creating a permanently lower monthly retirement benefit and survivor benefit—up to 4% less.
Working spouses can collect Social Security in more than one way: They can collect Social Security based on their own earnings record, or they can collect a spousal benefit that will provide half of the other spouse's benefit as calculated at their full retirement age (provided their spouse has already filed for their own benefit, though there is an exception for divorced couples).
A spouse eligible for benefits, both as a retired worker and as a spouse (or divorced spouse), and who is not yet full retirement age must apply for both benefits. The SSA will pay the higher of the two benefits.
One common tactic to claim spousal benefits was known as file and suspend. Here's how it worked: One spouse would file for benefits at full retirement age and the other would claim spousal benefits on the first spouse's record. The first spouse would then ask Social Security to suspend their benefits. Both spouses could then accrue delayed retirement credits on their benefits that would increase their eventual monthly benefit—all while the second spouse collected spousal benefits.
As part of the Bipartisan Budget Act of 2015 Congress eliminated the file-and-suspend loophole for those who turned 62 on or after Jan. 2, 2016.
How Spousal Benefits Can Be Retroactive
Certain circumstances do still allow for spousal benefits to be retroactive:
- A surviving spouse younger than full retirement age and who files for survivor benefits within one month of the worker's death can receive a month of retroactive benefits, starting with the month the worker died.
- A widow or widower who is under full retirement age may qualify for up to six months of retroactive benefits if the deceased worker claimed reduced benefits before full retirement age.
- Disabled widows and widowers, who are eligible to claim survivor benefits as early as age 50, can collect up to 12 months of retroactive survivor benefits if they claim survivor benefits before age 61.
The Bottom Line
Once a commonly used tool for retirement funding, spousal Social Security benefits can still be retroactive but only under specific, limited circumstances. Those who think they may meet the required conditions should consult a financial counselor to review their options.