Social Security – Spousal Benefits, File and Suspend & Divorced Spouses

Spousal Benefits – Summary

Several Social Security claiming strategies were eliminated in 2015 including the ability to file a “restricted application for spousal benefits,” which allowed you to claim benefits based on your spouse’s work record and then switch to claiming on your own work record at a later date.  This strategy is no longer possible if you turned age 62 after December 31, 2015.

Claiming before your Full Retirement Age (FRA) on a spouse’s record means you’ll lose even more than claiming on your own record—the benefit reduction for a spouse is up to 35% while the reduction for claiming your own benefit is up to 30%.

Spousal Benefits – More Information

With spousal benefits, you file a “restricted application” and collect up to 50% of your spouse’s Full Retirement Age (FRA) benefit.  To be eligible for spousal benefits, your spouse must either be collecting Social Security or have “filed and suspended” his benefits. (See next section for file and suspend.)

Since rule changes in 2015, anyone who was 62 or older after December 31, 2015 (born before January 1, 1954), retains the right to claim spousal benefits when they turn 66.  Younger people will no longer be able to claim spousal benefits when they turn 66.

If younger than 62 by the end of 2015 (born on or after January 1, 1954 ) and you file for Social Security benefits, you will be required to collect the highest benefit to which you are entitled, either on your own earnings record or as a spouse.

This means that if you were born in 1954 or later, you are not able to file what’s called a restricted application and collect only a spousal benefit while letting your own retirement benefits increase by 8% a year for four years from age 66 to age 70.

File and Suspend

File and suspend is not being eliminated, but since May 1, 2016, it can no longer be used to trigger a spousal benefit or child’s benefit.  If you did file and suspend, your spouse can receive spousal benefits when they turn Full Retirement Age (FRA, 66 or 67) while their own retirement benefits continue to grow by 8% per year up to age 70.  But to file and suspend and trigger spousal benefits, you must have done so before May 1, 2016.

Since April 30, 2016, filing and suspending no longer allows a spouse or minor dependent child to claim benefits off the suspender’s earnings record.

Those who exercised “file and suspend” before May 1, 2016 are grandfathered under the old rules of allowing file and suspend.  But starting May 1, 2016, one spouse must be collecting his/her benefits for the other spouse to receive spousal benefits.  With the new rules, minor dependent children or a permanently disabled adult cannot collect benefits unless the primary adult is collecting social security.

Rules for Divorced Spouses are Different

The rules are different for divorced spouses.  They have more options available to them. If they were 1) married for at least 10 years and 2) divorced for at least two years, they are “independently entitled” spouses.  If they are both at least 62 years old, both “independently entitled” spouses can claim spousal benefits based on an ex’s earnings record, even if the ex has not claimed their own benefits.  This rule is unchanged by the new rules.

The new rules phased out the ability to file a “restricted” claim for spousal benefits anytime between Full Retirement Age and age 70.  That strategy allows or spouse or eligible ex-spouse to claim only spousal benefits while their own Social Security benefit continues to grow until age 70.  That strategy is now restricted to those born before 1954.

This is another example of how divorced spouses have more options than married people.  Only one spouse in a married couple can file a restricted claim for spousal benefits, provided that the person filing the claim was born on or before January 1, 1954.  But divorced spouses born before January 1, 1954 can each file a restricted claim for spousal benefits on the ex’s earnings record and allow their own benefits to grow at 8% per year, up until age 70.

What Doesn’t Change With 2015 Rule Change

Major changes were made November 2, 2015, with the signing of the budget bill, reducing or eliminating the strategies available to maximize your Social Security benefits.

• Anyone collecting spousal benefits before May 1, 2016 based on the earnings record of someone who has file and suspended their benefit can continue receiving those benefits.

Survivor benefits are completely unchanged.

• You can claim benefits as early as Age 62, before your Full Retirement Age of 66, but your benefits are reduced approximately 25%, for life!

• If you delay claiming Social Security benefits, they increase by 8% a year for four years from age 66 to age 70.

Bottom Line

• Since May 1, 2016, if you turned age 62 after December 31, 2015, you can no longer file and suspend to trigger spousal benefits for your spouse.

• If you wait until at least your full retirement age (66 or 67) before starting to collect Social Security benefits you increase the number of options available to you to maximize your lifetime benefits. But this alone should not determine the best age to claim benefits.

• Just as before, it often makes sense for the spouse with the higher benefit to delay until age 70.  That results in a higher benefit while either spouse is still living. It will also maximize the larger of the two survivor benefits they get, since that will be the amount the survivor has to live on.

• For married couples especially, it is best in most cases for the higher earning spouse to delay benefits if possible, up to age 70.  This locks in the maximum retirement benefit as well as the largest survivor benefit should he die first.

• Divorced couples have more options.  If they were married for ten years and divorced for two years, both ex-spouses who are single can collect spousal benefits from Social Security.

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