Chris Stein, CFP®
Filing a Restricted Application
The question this week is about two different Social Security concepts: filing a restricted application and employing the file-and-suspend strategy:
I need clarification on filing a restricted application for Social Security. My wife was born in October 1953, and I was born in March 1955. She is considering applying this year, at 66, for her Social Security benefit. I haven’t decided when to apply, but we had originally planned to have her take hers at age 66, and let mine grow until I hit age 70. Her full retirement PIA is around $2,400 per month, and mine is closer to $3,000.
Would she be eligible to submit a restricted application to obtain a spousal benefit from my earnings record? Or is that no longer allowed because of the 2015 changes? That is, am I even eligible to request the ‘file and suspend’ and allow her to file a restricted application to collect spousal benefits while her benefit grows? Or has that window closed?
You mentioned two separate Social Security-related concepts, which we will look at here: a restricted application for claiming Social Security benefits, and ‘file and suspend.’
How do Restricted Applications Work?
A restricted application is where you specify to Social Security when you file that you want just a spousal benefit, instead of claiming your own benefit. That’s allowed for people who have reached their full retirement age and were born before January 2, 1954. Your wife falls into that category, so she is allowed to file a restricted application. You are not, as you were born in 1955 and didn’t meet the cutoff.
Remember that, to claim a spousal benefit, the other spouse on whose record you want to claim has to have filed for their own benefit, as that unlocks the door to the spousal benefit. So, on the one hand, your wife has the right to file a restricted application for only spousal benefits, but she can only do that if you, as her spouse, have filed.
Is ‘File and Suspend’ Still Available?
The second thing you mentioned is ‘file and suspend.’ You used to be able to unlock the door to a spousal benefit by filing for your own benefits, then immediately suspending them so yours could continue to grow to age 70. This strategy would have left the door unlocked so your wife could file a restricted application for a spousal benefit while letting her benefit grow in the background.
While that was a glorious strategy, that aspect of file and suspend is no longer available. The only people who got grandfathered in were those who had already filed and suspended before April 29, 2016.
File and suspend is still available to anyone after their full retirement age. However, now when you suspend, it suspends not only your benefits but all auxiliary benefits under you. In your case, it would suspend the spousal benefit, and that undermines the entire strategy.
Why would someone want to suspend their benefit claims? There are several reasons. Maybe you went back to work, or you decided you claimed too early, and you’d like to have your benefit grow, earning delayed retirement credits. Say you claimed early and, after an analysis, realized you needed additional secure (lifetime) income. You could suspend your benefits at your full retirement age, earn the 8% annual increase to your Social Security benefits, then turn them back on at 70. As soon as you suspend, the delayed retirement credit starts accumulating at that point, up until the age of 70.
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