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Today’s question comes from Jim, and it actually came to us in 2019. But the information is valuable, so we decided to share it again:
“My wife and I were both born in 1953. I was the breadwinner, and my spouse has low Social Security benefits — approximately $800 a month.
At full retirement age, can she claim benefits of $800 and I claim spousal of $400? Then, when I turn 70, can I change to my benefits to $3,100, and then can she get $1,400 (one-half of what I would have received at 66)?”
The value of a ‘restricted application’
Jim: The scenario that you outline in your question is correct. The only mistake is that the benefits that you will receive at 70 will be higher than you state in your question.
The claiming procedure that you outline here is referred to as a “restricted application.” In your case, the wife claims first and then the husband claims a spousal benefit at full retirement age (FRA). Then, the husband claims his own benefit later. (Note: You must wait until FRA to claim a spousal benefit, or you will not be able to claim your own benefit later.)
Because the husband waited to claim his own benefit, his benefit will be higher. The wife can then get a spousal supplement to her benefit that reflects half the benefit he would have received at his full retirement age. The reverse situation is also possible, where the husband claims first and the wife gets a spousal benefit, etc.
The benefit of using a restricted application is that you will receive $400 a month while you are waiting to receive your benefit, and your benefit increases every month that you wait. There is no penalty for getting this extra spousal benefit. We sometimes refer to this as “free spousal benefits” because this is all extra money in your pocket.
The good news here is that you have underestimated your benefit at age 70. If your benefit at FRA is $2,800, then waiting until 70 to claim your benefit will increase your benefit to $3,696, a 32% increase over your benefit at 66. This 32% increase is true for anyone who has a FRA of 66 and waits until 70 to claim.
For someone who has a FRA of 67, the increase is 24%. For people with an FRA between 66 and 67, the increase is something in between.
Unfortunately, not everyone can use the restricted application strategy. The law was changed in 2015, and now only people born before Jan. 1, 1954, can use this strategy. It looks like you and your wife got in just under the wire.
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The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.
I hold a Ph.D. in economics from the University of Pennsylvania and taught economics at the University of Delaware for many years. I now do the same at Gallaudet University.
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Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.