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  • Writer's pictureChris Stein, CFP®

Spousal Benefit vs Your Own Earned Benefit

A divorced woman trying to decide between taking her own Social Security retirement benefit or the spousal benefit for which she is entitled due to her previous marriage sent us the following question:

“I currently qualify for both my own SS benefit as well as a spousal benefit from my previous marriage of 25 years.  I hear you guys recommend people try to delay filing to maximize their monthly benefit, but I don’t think that makes sense in my case.  If I delay filing for my own benefit until 70 I will get $1,350 per month, but at age 66 I qualify for a $1,250 monthly spousal benefit.  If I wait to collect my own I will give up $60,000 in exchange for only a $100 monthly increase at age 70.  I would have to live to 120 for this to make sense!  I should just take the spousal benefit, right?”

You Can Have Your Cake & Eat It Too

She has fallen into a common assumption that you can’t have your cake and eat it, too.  In fact she can collect the spousal benefit and wait to claim her benefit until age 70!  The strategy that unlocks this “double dipping” is for her to file a “restricted application” when she reaches her full retirement age of 66.  She will restrict her application to just her spousal benefit and leave her own benefit un-claimed.  It is important she request this specifically since by default the SS office will process a claim for her own benefit and then award her an “excess spousal benefit”.  The harm in this default application is that it prevents her own benefit from growing due to delayed retirement credits.  The key with the restricted application is that it leaves your own benefit fully unclaimed, allowing it to grow by 8% per year until age 70.  In fact her own benefit is just $1,023 per month if she were to claim it at age 66.  By delaying that benefit to 70 it grows to $1,350, which exceeds her spousal benefit.

Restricted Application

The beauty of the restricted application is that she gets paid for waiting until her own benefit reaches its maximum amount.  Her question to us reveals that she believes she must choose one or the other, but not both.  It is true she cannot collect both simultaneously, but she can absolutely switch from one to the other as we have described.  But only if she waits until her full retirement age AND uses the restricted application technique.  Not only that, if her ex-spouse were to pass away she would be able to switch again to a survivor benefit totaling more like $2,500 per month!  Based on her description her best course of action will be to :

  1. File for spousal benefits ONLY at age 66.

  2. Switch to her own benefit at age 70.

  3. Switch again to her survivors benefit if her ex-spouse pre-deceases her.

Got to love cake!! (Eating it AND having it…).

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