Filing a Restricted Application for Social Security Retirement Benefits

Today I am writing a little about filing a restricted application for Social Security retirement benefits.  I turn 62 later this year but have no intention of applying for an early retirement benefit. I have not yet had any personal interactions with a representative of the Social Security Administration. I have heard from others that when a retiree seeks to apply for benefits, they are told what to do and how to do it but generally that is the extent of it.

If you ask a specific question about a specific claiming strategy (e.g., a filing a “restricted application”)  you may receive a correct answer or maybe not, depending on the knowledge level of the employee. One thing I consistently read is that Social Security representatives are not trained to analyze and answer questions like “What is the best claiming strategy for me and my spouse?” That is up to you to discover, on your own or with the help of a financial adviser.

The strategy of filing a “restricted application” for benefits is not generally known or considered.  A recent report from the AARP quantifies the general lack of knowledge by baby boomers of how Social Security benefits are even determined.   Only 3% of the participants in the survey scored 75 or greater on a basic Social Security knowledge test. That is unfortunate and sad because a lot of lifetime income can be at stake.

So what is a “restricted application” for Social Security retirement benefits?

The answer is actually simple. The questions of if and when you should use a restricted application are more difficult to answer.

A “restricted application” is used when a “retiree” wants to file for Social Security retirement benefits but not his or her own benefit. Instead, the retiree ”restricts” the application to a spousal benefit.

So who would file a restricted application and why?

Let’s assume that a “retiree” is married and has determined that it makes financial sense to delay receiving Social Security benefits until past full retirement age, e.g., age 70.  This delayed claiming strategy makes good sense because of the significant increase in benefit amount that can be realized. (For example, if you would be entitled to a $15,000 annual benefit at age 62, that benefit increases to $26,400 if you wait until age 70.)

However, if the retiree’s spouse has reached age 62 and is receiving benefits, the retiree can claim and receive a spousal benefit while continuing to accrue credits for delaying the retiree’s own benefits.

Here is an example of how this would work:

Assume that a wife started collecting benefits years at age 62. The husband, who is now 66, is still working and wants to delay receiving his own Social Security benefit until he stops working at age 70.  Further assume that the wife would have been entitled to a Social Security benefit at full retirement age of $1,750/month.  Therefore, the husband is entitled to receive a spousal benefit of $875/month for every month that the husband does not claim his own benefit. If he waits until age 70 as planned, he would receive $42,000 in spousal benefits from his wife’s earnings record. More important, for each year of receiving the spousal benefit, the husband is receiving credits that will earn him an 8% annual increase in his own benefit.  Of course, he switches to his own Social Security benefit at age 70.

To be clear: Filing a restricted application would give this couple $42,000 in additional income over a four year period!

The restricted application strategy is usually best if the lower earning spouse has a Social Security retirement benefit that is at least half as large as the higher earning spouse’s benefit. If that is not the case, the better strategy for spouses may be “claim and suspend.”

Keep in mind that a restricted application for Social Security benefits can be filed only if your spouse is already receiving a retirement benefit.

Also keep in mind that you may not be told any of this at the Social Security office unless you ask the right person.  This is when it pays to apply for benefits in person, not online.

There is much to consider when deciding on Social Security benefit strategies, don’t you agree?

 


Comments

  1. Janette says

    Is there a benefit of waiting if the spouse is not still working? What happens when both people stop working at 59?
    SS is just so darn confusing!

  2. CS says

    The only problem with your strategy is that if you claim your spousal benefit before your own FRA (full retirement age) that SSA “deems” you are collecting your own benefit FIRST and then only getting the benefit of the spousal if it is above and beyond your own benefit. Your strategy only works if the person claiming the spousal benefit has reached FRA. So the valid technique is to file for your spousal benefit as soon as you reach FRA and let your own benefit continue to accrue until age 70 at which time you would switch from claiming the spousal benefit to claiming your own.

    CS

  3. Bryan Maslanka says

    just so i understand this properly. i am 64 & wife is 62. she is entitled to both social security & Railroad Retirement pension. so should we start her (the lower earning spouse by more than 1/2) now on the combined RR & SS pension? and then when i turn 66 should i file & “suspend benefits” until age 70. When Lois reaches 66 should we then switch her to spousal benefits? Will you notify me by email of your answers?

    • mike s. says

      In the case of Primary collecting early reduced benefits at age 62, and Spouse is already 66, what is the Spousal Benefit amount?

      1) 50% of the Primary’s FRA, despite the fact that primary wont reach FRA age for 4 more years?
      OR
      2) 50% of the Primary’s age-62 reduced benefit that is currently being received?

      SSA website is very unclear on this specific scenario, as are their responses to inquiry emails.

  4. Alva Hebel says

    I will be 69 yrs. old in Nov. I am currently collecting $l,087/per month on my former husbands (now deceased) account. I was unmarried at that time & started collecting a discounted spousal amount at age 60. Since then, I am re-married and my present husbands monthly SS amount is $782/mo. Is there any benefit for me to file a “Restricted Application”? Thank you for your assistance.

    • MJP says

      John – Click the “email” link in the “Get Free Updates” then follow the instructions. Thanks for subscribing!

  5. Gail Maffai says

    I just turned 62. I am interested in filing a restricted application for spousal benefits. My husband is 71 and collects SSI. Is my understanding correct?: I can collect 50% of my husband’s benefit and defer mine for now. Can I switch to my PIA at age 66 (I am the higher wage earner) or MUST I wait until age 70? All information I read is unclear. My full retirement age is 66.

  6. Alex S says

    Gail,

    You will not be able to file restricted under your husband until you reach your Full Retirement Age (66 in this case). If you file from 62-65, you will still receive the greater of your benefit or 50% of your husband’s but your benefit will not continue to grow. If you are the higher wage earner, the difference in strategies between filing now and waiting until 66 will likely be substantial.

  7. Mike P. says

    My wife and I are both FRA. She is no longer working and does not collect any social security benefits. I plan to continue to work. She has the lesser income. 1.) Can we both file for spousal benefits? 2.) If she files for her spousal benefits only, will she continue to receive an 8% annual increase in her own benefit when she switches to her own Social Security benefit at age 70. 3.) What is the breakeven point / is it a better strategy for my wife to file for her full benefit (about $1,500 a month and receive no 8% annual increase) and I file for her spousal benefits (about $ 750 a month)?

  8. linda says

    If I filed for social security but canceled the application before collecting any money can I still file for spousal social security

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