A small group of people can still take advantage of a Social Security rule that will soon be phased out.
The Social Security provision is called filing a restricted application to receive spousal benefits. It was eliminated except for older Americans when Social Security was revised in 2015.
Almost all potential beneficiaries will have exceeded the age restrictions in the next couple of years. Under the provision, the spousal beneficiary (we will make this beneficiary a wife and lower wage earner for simplicity’s sake) can file a restricted application on her own benefits and receive spousal benefits while she lets her benefits grow to the maximum amount at age 70, at which point she will switch to her own benefits.
In order to do this, she has to have turned 62 before Jan. 2, 2016, and has to have reached full retirement age by the time she files. Also her spouse has to have applied for and be receiving his benefits. For anyone who turned 62 on Jan. 2, 2016, or later this provision is no longer available, according to the Social Security Administration.
The provision allows the wife to receive spousal benefits while letting her benefits grow. Social Security benefits grow on a monthly basis for each month after full retirement age that a person delays receiving the benefits until the person reaches age 70, at which point the benefits are at the maximum amount possible. Full retirement for most people is now age 66, but it is gradually increasing so that full retirement age for those born in 1960 or later will be 67.
Spousal benefits, on average, are half the amount the primary earner receives. The advantage to filing a restricted application is to let the wife’s benefits grow while she collects on her husband’s benefits until she reaches age 70. If she has no earnings history and is not entitled to benefits on her own record, she would just file for spousal benefits rather than filing a restricted application, because she would not have any benefits of her own that would increase with time.
There are several variations on this strategy that might be beneficial, depending on the couple’s circumstances. For instance, the husband and higher earner might want to collect spousal benefits on his wife’s lower earnings record while he lets his much larger benefits grow until he reaches 70. It partially depends on how long the couple thinks each will live and at what point each can start collecting their own benefits, said Dr. William Reichenstein, principal and researcher of Social Security Solutions, a research and data center for Social Security strategies. He also holds the Pat and Thomas R. Powers Chair of Investment Management at Baylor University in Waco, Texas.
Several Social Security calculators are available, including one from the Social Security Administration and one from Social Security Solutions, as well as other private companies, that can help near retirees decide how to maximize their benefits.