Social Security Matters: Using a restrictied application to maximize benefits

Dear Rusty:

I was born on 1/14/1953, and my wife was born on 6/27/1954. I will have the largest Social Security benefit by 2 or 3 to one. She has been retired for a year or so, but I am working part time. We planned on not taking our SS until 70, since my IRA and Social Security will cover us until 90 plus. I want to maximize my SS benefit in case we live past then. I have read about a restricted application and file and suspend, but I get conflicting information on who must be born before 1/2/54. Is there anything we can do besides wait to 70 to maximize our benefits?

Signed: Wanting to Maximize

Dear Wanting:

How you, as a married couple, should plan your Social Security depends largely upon whether your wife will be eligible for a spousal benefit from you and, if so, how much her spousal benefit will be. Your wife will get a spousal benefit from you if her own benefit amount at her full retirement age (66) is less than half of your benefit amount at your full retirement age (66). The difference between those two amounts will be added to your wife’s own benefit (from her own work record) to become her spousal benefit. At her full retirement age (FRA) she would get 50 percent of the amount you were eligible for at your FRA, which you reached in January 2019. If your wife’s benefit at age 70 will be more than her spousal benefit will be, then it would be prudent for her to delay claiming until age 70 when her benefit will be 32 percent more than it would be when she turns 66. However, if her spousal benefit will be more, it could make sense for your wife to file for her own benefit first, which would allow you to file a “restricted application for spousal benefits only.” Your wife cannot file a restricted application because she was born after Jan. 1, 1954, but you can file the restricted application because you were born before that (the “File and suspend” option which allowed your wife to collect spouse benefits while your benefits are suspended is no longer available).

Provided your current finances, as well as your health and expected longevity suggest you can delay, it would be a wise strategy for you to delay claiming until age 70 because it will provide you with the maximum possible monthly benefit and also the most in cumulative lifetime benefits if you attain at least “average” longevity (about 84). This would also give your wife the highest possible survivor benefit should you predecease her (as your widow, your wife gets 100 percent of the benefit you were receiving at your death). Your wife cannot collect a spousal benefit from you until you start your own benefits, but if she were to choose to claim her own Social Security retirement benefit from her own work record first (so you could file the restricted application), she would switch to her higher spousal benefit when you claim.

So, if your wife’s spousal benefit will be her highest benefit, as a couple you may wish to consider your wife filing for her own benefit to start in January (will be reduced by about 3.3 percent) and, at that time, you file a “restricted application for spousal benefits only” which means you will collect 50 percent of your wife’s (unreduced) FRA benefit amount while your own Social Security benefit continues to earn delayed retirement credits (DRCs). DRCs are given at the rate of 2/3rd of 1 percent per month of delay (8 percent per year of delay), up until age 70 when your benefit will be 24 percent more than it would be at age 67. Then, at age 70, when you switch from the spousal benefit from your wife to your own SS retirement benefit, your wife can file for her spousal benefit from you. If you are, indeed, fortunate enough to live well into your 80s, the above will provide you with considerably more in lifetime benefits than any other strategy you might consider.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website or email us.