Note: with the passage of the Bipartisan Budget Bill of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details.
I recently had the pleasure of taking part in a live interactive event with Yahoo! Finance, where folks were able to ask virtually any question they wished. We received and responded to over 200 questions – they’re all on Facebook on the Yahoo! Finance page (click the link to go to the page). One recurring theme played out over and over: Social Security Spousal Benefits are not understood by a vast number of folks.
Naturally I find this to be disturbing. Social Security Spousal Benefits often represent a large part of the total benefits available to a couple. This benefit is even more important for many divorced spouses, as it might represent the only benefits available to many divorcees. Understanding this benefit is very important, as SSA staff often isn’t fully-conversant in the options that you have available.
With this in mind, I’ve developed the following list of Frequently Asked Questions, a FAQ for Social Security Spousal Benefits. As more common questions are brought forth I’ll update the list – let me know if there’s anything missing or if any of the FAQ’s needs a better explanation.
Social Security Spousal Benefits FAQ
1. Q: What is the maximum amount of spousal benefits that I can receive?
A: The maximum amount of spousal benefits that can be received is 50% of the other spouse’s Full Retirement Age (FRA) benefit, which is also known as the Primary Insurance Amount, or PIA.
2. Q: How can I receive 50% of my spouse’s benefits?
A: In order to receive a spousal benefit that is 50% of your spouse’s Full Retirement Age (FRA) benefit (also known as PIA), you must be at FRA yourself, and your spouse must have filed for his or her own benefit. Your spouse could be currently receiving benefits based on his or her own record, or he or she may have filed and suspended – in either case, you’re eligible for the spousal benefit. Lastly, you must not have filed for your own benefit prior to FRA.
3. Q: Can I receive a spousal benefit while delaying my own benefit to achieve the delayed retirement credits of 8% per year?
A: Yes, you can file a restricted application for spousal benefits only, which will allow you to receive the spousal benefit alone, without impacting your own retirement benefit. This allows you to receive a benefit equal to 50% of your spouse’s PIA while delaying your own benefit to accrue the delayed retirement credits of 8% per year of delay. You must be at FRA yourself in order to file the restricted application.
4. Q: Can I file for my own benefit at age 62 and later file for 50% of my spouse’s benefit?
A: Unfortunately spousal benefits don’t work quite that way. When you file for your own benefit prior to FRA, your benefit is permanently reduced. That reduction amount will follow when you file for spousal benefits later.
An example is: You are 62 years of age, and you’ve filed for your own benefits in the amount of $600. This represents a $200 reduction from the amount you would have received at FRA. Later, at FRA, you file for the spousal benefit based upon your spouse’s $1,800 benefit at FRA. Instead of receiving $900 (50% of his $1,800) you would receive $700, which reflects the $200 reduction you have since you filed for your own benefit early.
5. Q: My wife and I are both nearly age 62 and we’d both like to file for our retirement benefits as soon as we reach age 62. Since her benefit is more than double my benefit, can I later switch to a spousal benefit equal to 50% of her benefit?
A: First of all, if you file for your own benefit prior to your FRA, you will not be eligible to receive a spousal benefit of 50% (see #4 above).
Secondly, this becomes a matter of timing. If your wife has already filed for her benefit when you file for your own benefit – that is, if she has filed earlier than you or at the same time – then there is a further complication called “deemed filing”.
Deemed filing applies when you are under FRA and you apply for your own benefit, you are deemed to have applied for all benefits that you are currently eligible for. If your wife has filed for her benefit, that has made you eligible for the spousal benefit at that time as well. If that’s the case, you will not be able to wait until FRA to file for the spousal benefit, you’ll have filed for your own benefit and the spousal benefit at the same time. And since you’ve filed early for both benefits, both will be permanently reduced, and you’ll get a much lower percentage as the spousal benefit – as little as 30% in some cases.
6. Q: Can I file and suspend when my wife reaches FRA and collect 50% of her benefit?
A: This is a classic confusion. What you’re describing is a restricted application, not file & suspend. Below are the definitions:
File & Suspend – A Social Security beneficiary files for benefits and then suspends receiving benefits. This can only be done when the beneficiary is at or older than FRA. The action of file & suspend results in establishing a filing record with SSA, which enables other benefits to be applied for on your record, such as your spouse receiving spousal benefits. At the same time, since you suspended receipt of benefits, your own benefit amount can continue to grow by way of the delayed retirement credits, at a rate of 8% per year of delay.
Lastly, having established a filing date, if you change your mind at some point in the future prior to re-filing for the enhanced benefit, you could receive retroactive benefits in a lump sum from the filing date to the present, and then continue receiving benefits as if you had filed on the original filing date (and didn’t suspend).
Restricted Application – An application is filed for only a spousal benefit, when the Social Security beneficiary is also entitled to a retirement benefit based on his or her own record. This allows the beneficiary to receive *only* the spousal benefit, while allowing his or her own retirement benefit to continue to accrue the delayed retirement credits at the rate of 8% per year. Two conditions must be met: 1) you must not have filed for your own retirement benefit prior to the restricted application; and 2) you must be at least Full Retirement Age (FRA) to submit a restricted application.
7. Q: If my spouse (or ex-spouse) collects spousal benefits based on my record, will that reduce the amount of benefit that I can receive later?
A: Spousal benefits (or other dependents’ benefits) do not impact the amount of a current or future benefit that the other spouse, the one whose record the spousal benefits are based upon, can receive.
8. Q: My husband and I are both nearing Full Retirement Age. Can we both file & suspend and receive spousal benefits based upon each other’s record? And then later at age 70 file to receive the maximized benefits on our own accounts?
A: Only one spouse can receive a spousal benefit at a time. (see #2 above) This is in part due to the fact that, in order to file the restricted application for spousal benefits only you must not have filed for your own benefit previously. The other requirement for a restricted application is that your spouse must have filed for his or her own benefit. Therefore, only one spouse can file a restricted application, since the other spouse must have filed. In order for both spouses to delay their own benefits to receive the maximized benefit at age 70, one spouse uses file & suspend, and the other files a restricted application.
9. Q: My wife started collecting her own benefit at age 62. I will be 66 (just less than 4 years older than her) next year. If I file a restricted application can I receive 50% of her age 66 amount, or will it be reduced since she filed early? Then later, when I reach age 70, can she file for a spousal benefit based upon my enhanced, age 70 benefit?
A: The spousal benefit is always based upon the Full Retirement Age (FRA) amount of the other spouse – not the amount of benefit that she is receiving. If you file the restricted application, only available when you’ve reached FRA, your spousal benefit will be equal to 50% of your wife’s benefit had she delayed filing until her own FRA.
Later, when you reach age 70 and file for your own benefit, your wife would be eligible to file for the spousal benefit based upon your record. The spousal benefit will be calculated on your age-66 benefit though, not your enhanced age-70 benefit. Plus (see #4 above) her total benefit will not be equal to 50% of your benefit – there will be a reduction since she filed early for her own benefit.
10. Q: Spouse age difference is 10+ years and the older spouse is the primary breadwinner. How does this affect these filing strategies?
A: For the older spouse, this person would almost act as if he or she were single. There are no strategies available for that spouse beyond file and suspend, which he or she should probably do at FRA just to have the protected filing date. Beyond that, the older spouse, being the primary breadwinner, should plan to delay benefits as long as possible in order to maximize a future survivor benefit for the younger spouse.
For the younger spouse, deemed filing will apply for any benefits taken prior to Full Retirement Age – so all benefits would be reduced (spousal and his or her own) to the minimum if he or she files at age 62. If he or she waits to file until Full Retirement Age the younger spouse would be eligible for a Restricted Application filing, enabling him or her to file solely for Spousal Benefits at that point and allow his or her own benefit to grow to the maximum allowed at age 70.
Upon the passing of the older spouse (if he or she dies first) the younger spouse would be eligible for a benefit based on the amount of benefit that the older spouse was receiving. If this occurs at or after the younger spouse’s Full Retirement Age, the Survivor Benefit would be 100% of the older spouse’s benefit – this is why it’s important for the older breadwinner to maximize his or her benefit.