Dear Retirement Adviser,
My wife is 63 years old, retired and gets a teachers' pension payment of $500 per month. She has enough Social Security credit of her own to get benefits based on her earnings record. I am 64 years old and still working. I believe that at age 66, I can apply for full benefits. When she reaches her full retirement age of 66 just six months later, she will get benefits equal to 50% of my benefits. Question: Does it make sense for her to apply for her own benefits now and then wait until she turns 66 to get an upgrade to 50% of my benefit?

Thanks,
-- Michael Mulls

Dear Michael,
Thank you for your question. You are not alone in being a bit confused about how Social Security spousal benefits work. It is complicated, after all.

If your wife files for benefits before her full retirement age, then she gets a benefit based on both her work record and your own. When her full retirement age rolls around, she cannot trade up to a full spousal benefit. It isn't an option.

Here's how it does work: When she files for benefits ahead of her full retirement age, the Social Security Administration always considers benefits based on her own work record first. If a spousal benefit, by virtue of your marriage, is larger than what she would receive based on her work record, then the benefit she would get is a combination based on her work record, and the difference is contributed based on your own work-related accumulation.

The downside is she cannot receive a spousal benefit until you file for retirement benefits. If she's not eligible for the combination of benefits because you haven't filed for benefits, then she'll get the higher combination amount when you start receiving your benefits, or if you file for benefits and at the same time suspend your Social Security benefits. Called "file and suspend," this allows you to earn delayed retirement credits when you take this step at your full retirement age and decide to postpone taking your benefits.

If your wife files for benefits early, she will permanently reduce her Social Security benefits. She may get an increase in benefits after you file, but it won't be the full 50% spousal benefit. If you die first, she will receive a survivors benefit based on your work record.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.