My Comments: Years ago, it was simply a matter of waiting to reach 65, showing up at the Social Security office and then waiting for a check to appear in the mail. Today, that idea is quaint and naive.
As the baby boomers reach age 62 and beyond, it’s become a chore to figure out when to apply. For one thing, there are a possible 97 months to choose from. If you have a spouse, there are 9 different options for each one of those 97 months. Between the best month and the worse month for you, there is often a $100,000 difference over time. Increasingly, financial planners such as myself are being asked to help.
Which is why I’ve become knowledgable and aligned myself with a team that provides a personalized Social Security Report that quantifies the best options. The flaw in this system is you cannot know ahead of time when you are going to die, but that’s probably a good thing. So you have to play the odds and hope for the best.
If you aren’t confused yet, you will be by the time you finish reading this.
By Dana Anspach
In many cases to get the most out of your Social Security benefits you will need to use something called a restricted application.
As there are different types of Social Security benefits you may be eligible for, a restricted application, sometimes referred to as “restricting the scope” of your application, specifies to the Social Security office that you are not simultaneously applying for all benefits you are eligible for.
To understand why you would do this first take a look at some of the types of Social Security benefits you may be eligible for:
• A benefit based on your own earnings record, referred to as a Retirement Insurance Benefit (RIB)
• A benefit based on a spouse or ex-spouse’s earnings record, referred to as a spouse’s insurance benefit (SIB)
• A benefit based on a deceased spouse’s or deceased ex-spouse’s earnings record, referred to as a Widow/Widower’s Insurance Benefit (WIB)
• A benefit if you are disabled referred to as disability insurance benefits (DIB)
How might you use these rules to boost your benefits?
If married, or eligible for a benefit on an ex-spouse’s record, once you reach full retirement age, you can use a restricted application to claim a spousal benefit, while letting your own benefit continue to grow. You would then switch to your own higher benefit amount when you reached age 70.
In Social Security’s online Programs Operations Manual System (POMS) their Scope of the Application section says:
“A claimant may choose to limit or restrict the scope of the application to exclude a class of benefits he/she may be eligible to on one or more SSNs for any reason (except where deemed filing applies). The reason may be to receive higher current benefits or to maximize the amount of benefits over a period of time, including the effect of delayed retirement credits (DRCs).”
Here are a few key points to note about the restricted application rules:
1. A spouse must be full retirement age to file a restricted application for spousal benefit only
2. A widow/widower, or survivor of a deceased ex-spouse, may file a restricted application even if they have not yet reached full retirement age.
3. A claimant who is caring for child (under age 16 or disabled adult child) who is entitled to child’s benefits may have the option to restrict the application to spouse’s benefits only even if they have not yet reached their full retirement age.
Regarding item number one above POMS says (GN 00204.020D.1):
“In fact, a spouse claimant at or past Full Retirement Age (FRA) has the right to restrict the application to exclude RIB. However, always take a RIB application in a reduced benefit situation when the spouse is insured for RIB as the “deemed filing” provision applies.”
A “reduced benefit situation” means if you are filing before you reach full retirement age. When you file before you reach full retirement age if your spouse has already filed for their benefits (in the cases of an ex-spouse they have to have reached age 62, but do not have to have filed yet) you are deemed to be filing for spousal benefits at the same time you file for your own retirement benefits. Doing this prevents you from using claiming strategies that might otherwise allow you to later switch between benefits.
If your spouse has not already filed for benefits, you would not be deemed to be applying for a spousal benefit, however, if they subsequently file for their own benefits before you reach your full retirement age, the deemed filing rules would kick in, and your future choices would be limited if you had filed before your own full retirement age.
Regarding item number two above, POMS says (section GN 00204.020E.4.a):
“A widow(er) or surviving divorced spouse may wish to exclude a reduced RIB from the scope of the application and defer filing for an unreduced RIB because of the increasingly greater amount payable after FRA because of DRCs,” and that in order to do so the Social Security office needs to take get a statement such as “I do not wish this application to be considered an application for reduced benefits on my own record.”
This means if your spouse or ex-spouse is deceased, and you are eligible for a widow/widower’s benefit on their earnings record, you have greater leeway to restrict the scope of your application, even if you have not yet reached full retirement age.
Regarding item three above POMS says (GN 00204.020F.2.a):
“A claimant who is between the age of 62 and FRA, has in his/her care a child (under age 16 or a disabled adult child) of the NH (number holder) who is entitled to child’s benefits, and is filing for spouse’s benefits is not deemed to have filed for reduced RIB. He/she may exclude RIB from the scope of the application for spouse’s benefits by a clear declination.”
In addition to item three above there are also special provisions when you are eligible for a disability insurance benefit that may allow you to file for spousal benefits, while not yet applying for your own retirement benefits. It is beyond the scope of this article to go into details about such disability or child benefit strategies.
Because the rules are complex, some couples seek the advice of an attorney to advise them on their best claiming options.
If you are married, or a widow/widower, a Social Security calculator (online software) can often provide you the needed Social Security strategy.
If you have dependents, multiple ex-spouses, may be eligible for disability benefits, or have other complexities, the services of an attorney may be appropriate.