Chris Stein, CFP®
Deemed Filing Social Security Benefits
A reader from Idaho asks about deeming when filing for Social Security benefits.
"My wife and I are both retired and living well on our IRA distributions. I am 66, and she is 65. I am not going to claim my benefits until I am 70 because my PIA amount is much larger, and we want the maximum spousal and survivor benefits. So my question is this: can my wife file on her much smaller benefits after her Full Retirement Age (FRA) and later switch on her spousal benefit when I file for my retirement benefit? Or, if she files at her FRA (at age 66 and four months), is this a "deemed filing" situation that will force me to file at that time? Either way, I will not be filing until age 70, but if more money is available, we don't want to miss out."
That's a good question because it's a little twist on 'deeming' that we haven't discussed before because it hasn't been asked this particular way. So let me describe what deeming is in relation to Social Security.
Social Security has a rule that when you apply for benefits, you are 'deemed' to be applying for all benefits to which you are eligible at the time. This rule prevents you from picking and choosing, and it restricts specific strategies. It mainly applies to people eligible for both their own benefit and maybe a spousal benefit.
In the past, there were fewer deeming rules than today, and you could choose the benefits you applied for. The strategy was popular then, but Congress closed several elements. Regardless, some degree of deeming has been around for a long time, particularly if you are claiming before your Full Retirement Age (FRA).
In your case, you are misinterpreting deeming. Here's why: in the scenario you describe, if your wife files at her FRA and you haven't filed, she will only be eligible for her own retirement benefit.
She won't be eligible for a spousal benefit because you won't have already claimed. But had you claimed before she did, deeming would apply on the day she files, and she would be deemed to be filing for all she's eligible – including her spousal benefit.
When you do file at age 70 (and she's probably 69), she will get the spousal offset, that is, the "bump up" in benefits when Social Security adds the spousal benefit because she will have become eligible at that moment.
What doesn't happen is what you're describing. Deeming does not leak over to someone else. Social Security doesn't say, "Oh, because your wife is filing, we're going to force you (as her husband) to file to unlock the spousal benefit that she would be eligible for if you had already filed."
Deeming doesn't work that way. It applies to someone in their circumstances on the day they file, but it doesn't force someone else to do something.
As a side note, something called the "restricted application" approach is still available for people born before January 2, 1954. In a few words, it allows someone to file only for their retirement benefit and opt for some flexibility on the spousal benefit. However, those folks are rapidly approaching 70, when that grandfathered rule will end, and no one else can benefit from restricted applications. We will be in that window of opportunity until January 2, 2024.
Anyone considering a strategy that involves something more exotic than the basic claiming of Social Security and who was born before January 2, 1954, should make sure to look into all the rules that apply specifically to them before deciding on a strategy.
You mention that your wife's FRA is at age 66 and four months. That implies she was born in 1956, and you (being one year older) were born in 1955. You both join those people born after January 2, 1954, so restricted applications would not be available to either of you. When you each go in to claim, you will be deemed to be filing for your own and any other benefits to which you are eligible, no matter your age.