One provision of Social Security benefits that is relatively unknown is the restricted application for Spousal Benefits. This provision allows a person to apply for benefits based upon his or her spouse’s record while delaying receipt of benefits based upon his or her own record.
The restricted application is only available when three factors have been met:
1 – the individual filing the restricted application has reached Full Retirement Age (FRA); and
2 – the individual has not filed for his or her own Retirement Benefit; and
3 – the individual’s spouse has filed for his or her own Retirement Benefit (could have filed and suspended)
Dick and Jane are ages 62 and 66, respectively. Dick filed for his own benefit at age 62, and Jane would like to delay her benefit to age 70, to achieve the maximum delay credits. Since Jane is at FRA (factor 1), has not filed for her own benefit (factor 2), and Dick has filed for his own retirement benefit (factor 3), Jane is eligible to file a restricted application for Spousal Benefits only.
Since Jane is at Full Retirement Age, the Spousal Benefit that she will receive is going to be equal to 50% of Dick’s unreduced benefit. Since Dick has filed early, he will be receiving a reduced benefit – approximately 75% of the amount he would have received at FRA. So Jane’s ultimate Spousal Benefit in this case will be roughly 2/3 of Dick’s current benefit.
Once Jane reaches age 70, she can now file for her full benefit, with the maximum delay credits applied (32%). Dick will be 66 at that time (or thereabouts) and so he will be eligible to apply for a spousal benefit – as long as 50% of Jane’s PIA (the amount she would have received if she filed at FRA) is greater than Dick’s PIA. So if Dick’s PIA was $800 and Jane’s PIA was $2,000, Dick’s overall benefit could be increased by the difference, $200, at this time. If Dick is younger than Full Retirement Age when Jane files, his Spousal increase could be reduced from that $200 offset if he files before he reaches FRA. For more on how the reductions for Spousal Benefits works, see Social Security Spousal Benefit Calculation Before FRA.
How About Ex-Spouses?
An ex-spouse can use the restricted application as well – provided that he or she was married to the former spouse for at least 10 years and has not remarried. One thing that’s different about a divorced person’s situation is that the ex-spouse doesn’t have to have filed (factor 3) – the ex only has to have reached age 62 and thus is eligible to file. In addition, if the former spouse has not filed for his or her own benefit, the couple must have been divorced for at least two years when he or she files for Spousal Benefits.
If there was more than one ex-spouse who fits all of the requirements, the individual can choose the Spousal Benefit that is the largest.An IRA Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.