The Claiming Strategy called File and Suspend is a thing of the past (deadline was April 30, 2016), but many Americans age 62 (by December 31, 2015) have a lot to cheer about. The “Restricted Application” for spousal benefits will continue for many years to come.
What is a Restricted Application? It is a claiming strategy that allows someone who is at their Full Retirement Age to claim only spousal benefits – worth half of their spouses or ex-spouse’s full retirement age amount for up to four years while their benefit continues to grow by 8% per year up to age 70.
The caveat to this claiming strategy is that one of the parties must be actually receiving Social Security benefits. The last of the eligible retirees will turn age 66 on January 1, 2020. This gives an eight year window of opportunity.
The situation is a little different for divorced spouses – one ex-spouse can claim spousal benefits on the other ex-spouse’s earnings record at age 66 – even if the other spouse has not yet claimed Social Security. Attached to this benefit is the requirement that the former spouse is at least 62 years of age and the couple has been divorced for two years.
You can still SUSPEND your benefit until age 70, but that will also SUSPEND any auxiliary benefits that are attached to that strategy – family benefits and spousal benefits. And for both parties to delay until age 70, you would effectively increase the monthly benefits while both are alive, but the smaller of the two benefits would stop upon the death of the first spouse. And to not claim a spousal benefit on one side this equation would eliminate income stream for a 4 year period.
Professional advice on this benefit is still recommended. When, why and how to file are all questions that are not easily answered without knowledge of the old and new laws attached to Social Security. Internet calculators have logic gaps and numerical flaws that can lead you down the wrong path – ultimately costing you money over your lifetime.
Remember, your decision is basically permanent….take an analysis with you to the Social Security office and tell them what you are filing for.
Contact us at 601-954-0699 or firstname.lastname@example.org or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA – we have your back on this one!