Updated Thursday, September 12th, 2019
Did you know that there are many ways you can claim Social Security benefits? On one hand, this means that people may choose a strategy based on their unique lifestyle, income needs, and family situation. On the other hand, it means that there can be potential room for error: A recent United Income study found that only 4% of retirees claim Social Security at the optimal time. There are so many options and rules that it can be difficult to know if you’re choosing the best option for you. For instance, not everyone knows about Social Security’s file and suspend strategy using the restricted application. This option allows those who qualify to file for their spouse to receive a spousal benefit while waiting to claim their own benefit. So, who qualifies for this Social Security claiming strategy, and who will not qualify once it is eliminated?
Americans born before January 2nd, 1954 qualify. Those born after that date will no longer be able to file a restricted application for spousal benefits thanks to the Bipartisan Budget Act of 2015. A spousal benefit is worth up to half of one spouse’s benefit. To use the strategy, you must have reached your full retirement age.
To give an example of how this strategy works, take a man who qualifies for a $1,000 monthly benefit at his full retirement age of 66. His wife qualifies for an $800 a month benefit and is above the age of 62. If she claims her benefits, he can file a restricted application to claim $400 a month, half of his wife’s benefit, as long as he hasn’t filed to claim his benefits already. In total they receive $1,200 a month ($800 + $400). Then when he turns 70, he can claim his own maximum benefit of $1,320, which has grown since he has deferred claiming his benefit for four years. This would mean that they would receive his $1,320 and her $800 for a total of $2120 per month.
This strategy basically makes it easier for the higher earning spouse to delay claiming benefits until he or she is 70. The spouse receiving a spousal benefit will also continue to receive it if the high-earning spouse passes away first.
At Zinnia Wealth Management, we can work with you to help figure out which Social Security claiming strategy is best for you and your spouse. Even if you can’t take advantage of the restricted application strategy, there are other ways to potentially maximize your benefit. You can read about them, and other recent changes to Social Security in our free guide. We also offer complimentary reviews so that you can get more information and ask questions based on your unique financial and personal situation.