Will the ‘One-Half’ Rule Slash My Social Security Benefit?

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This week’s question comes from Rhonda:

“I was born in 1953. My ex-spouse was born in 1952. We were married 31 years before we divorced. He began collecting Social Security when he reached his full retirement age of 66 last year. I am guessing that he is getting the maximum monthly allowance for Social Security. I was not going to take mine until I turned 70. My benefit at 66 was probably around $1,650 to $1,700 a month.

Can I still claim one-half of his benefit until I reach age 70 and then switch to mine, which should be about 30% higher at that time? I thought that there was a rule that my Social Security benefit had to be less than one-half of my ex-spouse’s before I could collect one-half of his (assuming other requirements, like marriage for 10 years, are met).

In other words, I do not think that I can claim one-half of his benefit until I reach 70, because my benefit is larger than one-half of his right now.”

The advantage of being born before 1954

Rhonda, you are in luck.

Since you were born prior to 1954, you can take advantage of an opportunity that is not available to those born in 1954 or later. Specifically, when you reach your full retirement age (FRA) — which is 66 for you — you can claim half of your ex-spouse’s FRA benefit amount, allowing your own benefit to grow at 8% a year until age 70. This claiming strategy is often referred to as a “restricted application,” since you are restricting your application for benefits to ex-spousal benefits only.

Note that this strategy does not require that your own FRA benefit be less than one-half of your ex’s FRA benefit. This “one-half rule” is important, but under different circumstances, as discussed shortly.

Sometimes, people confuse the restricted application strategy with the file-and-suspend strategy. These strategies have some similarities, but they are indeed different.

Moreover, the file-and-suspend strategy was eliminated as of April 2016. So, if you are talking with a Social Security representative, take care to use the phrase “restricted application” and not “file-and-suspend.” If you mention “file-and-suspend,” you will be told something like: “That option no longer exists, so let’s move on to the rest of your application for benefits.”

Finally, let’s return to the one-half rule. Rhonda, this rule is important when you claim your own retirement benefits. If your FRA benefits are less than one-half of your ex’s FRA retirement benefits, then you qualify for a spousal supplement. If your FRA benefits equal or exceed one-half of your ex’s FRA benefits, then you do not qualify.

Rhonda, your case illustrates the complexities of Social Security. Clearly, you could benefit from some inexpensive professional help.

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About me

I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years. In 2009, I co-founded SocialSecurityChoices.com, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.

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.