Couples Can Reap More from Social Security

Last fall, Congress closed a loophole in Social Security rules that allowed couples to “file and suspend” benefits, a strategy that helped many couples earn larger monthly checks from the program. Many married couples who were planning on utilizing this strategy were forced to scramble and reevaluate their retirement income plans.

However, another option to maximize Social Security payments does still exist. It’s called a “restricted application” and it might be the right choice for some couples.

So how does it work?

Let’s assume our fictional couple, Don and Debra, have reached ages 66 and 62, respectively. Debra can file for early benefits at age 62. Meanwhile, Don has reached full retirement age, but files for spousal benefits instead of his own benefit amount. These benefits will be based upon Debra’s work record, rather than his own, and his checks will be up to half of Debra’s monthly benefit amount.

Since he has reached full retirement age, Don can file for these benefits using a “restricted application”. He will receive spousal benefits now, while allowing his own benefit amount (based on his work record) to grow larger each year. For each year that a person delays claiming their own benefits, up to age 70, the amount grows by about 8 percent per year.

When Don turns 70, he will fill a claim for his own benefits, which have grown larger over the past four years. Debra then switches to spousal benefits, based on Don’s higher benefit amount. Essentially, the couple accepted smaller benefits for a few years’ time, in exchange for a much greater payoff in the future.

This Social Security strategy is not right for every couple. But because it is a promising option, it is one that every couple should at least consider during the retirement planning process. If you’re trying to decide if filing a restricted application is right for you, or if you have any other questions about Social Security, call our office to schedule a consultation. We can help you analyze your situation and determine how to proceed.