January 18, 2019 | eFocus @ Legacy
By: Rachel K. Wolf, Trust Tax and Financial Planning Officer, Legacy Private Trust Company
If you or your spouse were born before January 2, 1954, you may still be eligible to take advantage of the restricted application filing strategy for Social Security retirement benefits. The strategy is limited and expires at the end of 2019.
The strategy allows one spouse who has reached full retirement age (FRA) and who is eligible to collect retirement benefits on his or her own record, to collect only a spousal benefit while deferring collection of his or her own retirement benefit in order to accrue delayed retirement credits (DRCs). DRCs increase the deferring spouse’s retirement benefits at a rate of 8% for each year of delay up to a maximum of four years. This allows the deferring spouse to not only draw current spousal benefits while increasing his or her own benefits through DRC, but also to increase survivor benefits for the long term.
You may qualify if:
If you were born before January 2, 1954, and are at or older than your FRA.
You have not filed for retirement benefits on your own record.
Your spouse has filed for his or her own benefits.
Only one spouse may file a restricted application.
EXAMPLE 1: Fred and Wilma are both at FRA (age 66) this year. Fred filed to receive his retirement benefit in the amount of $2,000/month. Wilma’s benefit, if she filed now, would be $1,000/month, but she chooses to delay her own benefit until she reaches age 70, thereby taking full advantage of DRCs. Because Fred filed for his retirement benefit and Wilma is at FRA, Wilma is eligible to restrict her application to spousal benefit only and will receive $1,000/month (50% of Fred’s benefit at age 66) while her own retirement benefit is accruing DRCs. Wilma’s benefit with the DRCs at age 70 would then be $1,320/month.
EXAMPLE 2: Barney is 67 years old and has not filed for retirement benefits because he intends to file at age 70 to receive his full DRCs. Barney’s wife, Betty, will be 63 this year. Betty just retired and files for retirement benefits on her own record. Barney’s age 66 benefit would have been $2,000/month and Betty’s would be $1,000/month. (Betty’s retirement benefit will be reduced for filing prior to her FRA.) However, because Betty is filing on her own record and Barney is older than his FRA and has not filed on his own record, Barney is eligible to file a restricted application for spousal benefits based upon Betty’s record. Barney will receive $500/month (50% of Betty’s benefit at age 66) for the next three years until he attains age 70, at which time he will file for his own retirement benefit that has increased to $2,640/month because of his DRCs.
- Beginning with the month you attain FRA, if you continue to work, your earnings do not reduce your benefit, no matter how much you earn.
- If you are divorced, you may qualify for this strategy but this article does not address the specific requirements for your circumstance.
- How to apply for a restricted application:
- If you are applying in person at an SSA office and are told that this option is no longer available, you may need to speak with a supervisor. You can also make an appointment with your local SSA office if you want help to make a restricted application, or contact the SSA at 1-800-772-1213.
- If you are applying online, you will be asked a series of questions about when you want your retirement benefits to start. Respond that you do not want your retirement benefits to begin with the month of filing, and that if eligible for both retirement and spousal benefits, that you wish to delay retirement benefits. In the comments portion of the application, you must type a statement informing the SSA that you are restricting your application to spousal benefits only. For example, “I am not applying for retirement benefits on my own record but wish to earn delayed retirement credits. I am filing a restricted application for spousal benefits only.”