If my spouse starts taking her spousal benefit at full retirement age and continues to work, will her eventual benefit (let’s say at age 70) be the same amount as if she did not take the spousal benefit. If so, sounds like a no brainer to take the spousal benefit now and then switch to her benefit later.
If I understand your question correctly, you are asking if your spouse should file for a spousal-only benefit now, and then switch to her own benefit at age 70? This strategy was know as restricting the scope of an application and was one of the greatest tools in the Social Security planning toolbox.
This strategy could make a lot of sense…if you can do it. Unfortunately, this strategy is going away. In fact, the only individuals who can still use this are those who turn 62 prior to January 2nd, 2016. For everyone else, it’s simply not available.
Under the restricted application strategy, an individual could restrict his/her application to only spousal benefits. By doing so, an individual would receive a spousal benefit up until their age 70. Then they would switch back to their own benefit which could be as much as 32% higher because of the delayed retirement credits.
For example, consider the example of Charles and Wanda. Charles has a full retirement age benefit of $2,200. Wanda has a full retirement age benefit of $1,200. At Wanda’s full retirement age, she files for a spousal-only benefit of $1,100. This will allow her own benefit to grow with the 8% annual delayed retirement credit.
There are a couple of things to know before you attempt this:
1) Before a spousal benefit can be paid on your record, you must file for benefits. Prior to the rule change, there was a provision called ‘file and suspend’ that would allow you to file for benefits and immediately suspend them. The result would be that you could earn delayed retirement credits on your benefit while your spouse was drawing a spousal benefit.
2) Expect the technician at the SSA to tell you that this strategy is no longer an option. It is! But only for a small group. Be prepared to argue with them. If they give you any issues, use this piece from their website.
See the section titled “Who will be affected?” It reads:
Who will be affected? If you turn 62 on or after January 2, 2016, and will be eligible for benefits both as a retired worker and as a spouse (or divorced spouse), then the new law applies to you. Deemed filing applies to retirement benefits, not to survivor’s benefits. So, if you are a widow or widower, you may start your survivor benefit independently of your retirement benefit if you restrict the scope of your application. There are also some exceptions to deemed filing. For example, deemed filing does not apply if you receive spouse’s benefits and are also entitled to disability, or if you are receiving spousal benefits because you are caring for the retired worker’s child. If you have questions about your specific situation, contact Social Security.
For more information on these recent changes, I wrote an article which covered them at https://socialsecurityintelligence.com/social-security-claiming-strategies-who-can-still-use-them/
I hope this helps. If you need individual help, don’t hesitate to contact me via my Need Help page.
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