How to get extra Social Security benefits if you're married and of a certain age

By Kathleen Pender
Aug. 23, 2019

 

Aug. 17--When Alan Waltner retired this year and started figuring out when to take Social Security, he was surprised to learn that he could still take advantage of a strategy -- sometimes called a loophole -- that Congress closed a few years ago to people born after 1953.

Waltner was an attorney; his wife is still working as a doctor. She's 68, he'll be 67 later this year. The San Francisco couple had been planning to follow the "conventional wisdom," for those who can afford it, of waiting to take retirement benefits until they each turned 70. That's the age at which benefits stop growing if you haven't taken them, Waltner said.

They changed their minds when they found out Waltner could begin collecting a spousal benefit based on his wife's earnings now while letting his own benefit continue growing 8% a year until age 70, at which point he can switch to his own benefit. The only catch is that his wife had to begin collecting her own benefit now, rather than letting it grow until she turns 70.

This strategy is known as filing a "restricted application" for spousal benefits. It's kind of like having your cake and eating it too.

The spousal benefit was originally created to help couples where one spouse didn't work or didn't work much, outside the home. It lets one spouse collect a percentage -- up to half -- of what the other spouse would be entitled to at his or her full retirement age.

Normally when you file for retirement benefits, Social Security looks at your benefit, based on your work record, and your spousal benefit and automatically pays whichever is higher.

In 2000, Congress passed a law that let one spouse, upon reaching full retirement age -- generally 66 -- file a restricted application for spousal benefits only, as long as the other spouse was already receiving his or her own retirement benefit. The applicant, say the husband, would collect the spousal benefit, while letting his own benefit grow until age 70, then refile for his own benefit.

That law also opened up a related, more lucrative, benefit-claiming strategy known as "file and suspend."

In 2015, Congress passed a law that closed both loopholes for most people. File and suspend ended for anyone who didn't get in before April 2016. Restricted applications remained open only for people born before Jan. 2, 1954. Anyone born that date or later cannot switch once they begin receiving benefits.

If you were born before that date, you can still file a restricted application for spousal benefits after you reach full retirement age, then refile for your own benefit at age 70, as long you meet two rules.

One is that you haven't previously filed for benefits. The only exception is if you filed less than 12 months ago. In this case, you could withdraw your application and repay all the benefits you received. Then you could refile, this time restricting your application to the spousal benefit, said Elaine Floyd, director of retirement and life planning at Horsesmouth, which trains financial advisers about Social Security and other topics.

The other rule is that your spouse has already begun receiving his or her benefit. That means your spouse must be at least 62, the earliest age you can begin collecting Social Security retirement benefits. The downside here is that spouses younger than 70 will give up the chance to let their benefit grow.

Between full retirement age and 70, your benefit grows 8% every year you delay taking it. Between 62 and full retirement age, it grows roughly 7% to 8% a year. (Full retirement age is 66 for people born between 1943 and 1954. For younger people, it ranges up to 67.)

This strategy works best when one spouse earned considerably more wages covered by Social Security than the other, Floyd said. In most cases, the higher-earning spouse -- who has more to gain by delaying benefits -- should file the restricted application.

If their benefits are roughly equal, the younger one generally should file the application, because that spouse's benefit has more years to grow.

If you are divorced, you may be able to file a restricted application for spousal benefits based on your ex-spouse's record, but different rules apply. Your marriage must have lasted 10 years or more, and you must be currently unmarried. If your ex-spouse is at least 62 and the divorce occurred more than two years ago, your ex does not have to be taking benefits, Floyd said.

People who were born in 1953 turn 66 this year, so 2019 is their first chance to file a restricted application. They're the last cohort of people who can do so, but they don't have to do it before year-end. They can do it anytime until age 70.

On Monday, Waltner filed a restricted application for spousal benefits. His wife filed for her own benefit, "even though this means giving up two more years of an 8% increase in her benefit," he said.

They both filed retroactively to May when she turned 68. (If you apply for benefits after full retirement age, Social Security will pay them retroactively for a limited number of months based on when you file.)

His wife's age-66 benefit was about $2,500 a month, so his spousal benefit is worth about $1,250 per month, or $30,000 over two years. When he refiles for his own benefit at age 70, it will be a little more than 16% higher than if he had taken it now.

Because he's no longer working, Waltner needs cash to cover some expenses, and he also figured he'd pay less tax on Social Security benefits than on other sources of income in the next couple years, such as with 401(k) withdrawals.

You can file a restricted application at a Social Security office, although Floyd has heard that some offices are mistakenly telling people they can't.

To apply online, go to https://secure.ssa.gov/iClaim/rib. At the bottom of Page 15, this question appears: "If you are eligible for both retirement benefits and spouse's benefit, do you want to delay receipt of retirement?"

Checking yes "is essentially how you file a restricted application," Floyd said in a newsletter. To make your intention perfectly clear, she recommends that in the comment section on the last page, you write, "I am restricting the scope of this application to my spousal benefit. I wish to delay my own retirement benefit in order to maximize delayed credits."

For more on spousal benefits, go to www.ssa.gov/planners/retire/applying6.html.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender ___

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