Receiving Social Security spousal benefits while letting your own benefit grow

The window is closing.  I’m referring to the window of opportunity to potentially take advantage of a valuable Social Security claiming strategy.  If you’ve never been married, this strategy unfortunately does not apply to you.  But if you’re currently married or were previously married, pay close attention!

Many of you already know the longer you wait to file for your Social Security retirement benefits, the larger the benefit amount will be when you do eventually file.  You’re able to delay your benefit up until age 70, after which there is no longer any increase or upside to further delaying.

Additionally, many of you also know Social Security provides “spousal benefits,” which are benefits paid to the spouse of a person who is entitled to Social Security retirement benefits.

What you may not know is there are certain circumstances where you can receive spousal benefits while delaying your own benefit to allow it to grow.  This is called filing a “restricted application.”   When you file for benefits, you restrict your application to receive only one benefit (i.e. the spousal benefit) while leaving other benefits (i.e. your own benefit) untouched.

In order to take advantage of the restricted application strategy, you need to be:

1. at least as old as your Social Security “full retirement age” which, for anyone reading this, is somewhere between 66 and 67, and
2. entitled to a Social Security retirement benefit based on your own earnings history, and
3. entitled to a Social Security spousal benefit from a current spouse, an ex-spouse or a deceased spouse (including a deceased ex-spouse)

If you’re entitled to spousal benefits from a deceased spouse or deceased ex-spouse, the window to file a restricted application is staying open for the foreseeable future, as there are no current legislative plans to close it.  However, the window is closing for those of you who are entitled to spousal benefits from a living current spouse or living ex-spouse.

As part of the Bipartisan Budget Act of 2015, Congress changed Social Security rules such that you can only file a restricted application for spousal benefits from a living spouse or living ex-spouse if you were born BEFORE January 2 1954.  Furthermore, recall there is no upside to delaying your own retirement benefit beyond age 70, since your benefit amount will no longer grow after that.  Therefore, this restricted application strategy is potentially relevant only for those of you whose birthday is BEFORE January 2 1954 but who are not yet 70.   As of the date of this newsletter, it encompasses a group of people who are at least 65 years and 10 months old, but not yet 70.

As each day passes, that minimum age will keep increasing while the maximum age will continue to stay 70.  Therefore, in approximately four years from now, the window will shut.  If you’re within the window of eligibility, it’s definitely worth looking in to whether or not you can take advantage of this strategy.