I was born in 1957 and so was my ex-husband. He remarried, but I didn’t. Our full retirement age (FRA) is 66.5, but he started collecting Social Security at 65.5, one year early. For my own Social Security, I plan to wait until age 70 to maximize my benefits. If I apply for spousal benefits when I reach my FRA, do I forfeit the right to wait until age 70 for maximum benefits on my own record?
– Audrey
Unfortunately, if you apply for your spousal benefit when you reach full retirement age, your own benefit will no longer accrue delayed filing credits. While that’s a cut-and-dried answer, I’ll explain this in more detail because there is plenty of confusion floating around about this. The bottom line is that under the Bipartisan Budget Act of 2015, claiming spousal benefits now means you forfeit the chance to delay and maximize your own Social Security benefit.
Do you have questions about retirement planning or Social Security? Speak with a financial advisor today.
Understanding Deemed Filing
Prior to the Bipartisan Budget Act of 2015, a person could file a restricted application. This allowed you to claim your spousal benefit while your own retirement benefit – which is based on your earnings record – continued to accrue delayed credits. As a result, you could claim your spousal benefit and then switch to your retirement benefit at age 70.
However, that option is no longer available. If a person born after Jan. 1, 1954 files for either a spousal or retirement benefit at age 62 and beyond, they are “deemed” to have filed for both benefits and will receive a payment equal to the larger amount.
Your exact question was a common approach that many people previously used and is one of the specific examples given on the Social Security website. Unfortunately, due to the law change, it’s no longer a viable option. (A financial advisor can help walk you through the complexities of Social Security and retirement planning.)
‘File and Suspend’ Strategy
The Bipartisan Budget Act of 2015 also effectively ended a similar Social Security strategy called “file and suspend.”
In this strategy, the higher-earning spouse would file for their own benefit at full retirement age. They would then immediately suspend their benefit. This opened their record so that their spouse could file for a spousal benefit. But by immediately suspending, the higher-earning spouse would continue to accrue delayed credits.
However, the 2015 law all but eliminated this strategy. Now, when someone suspends their benefit, no one else can receive a benefit on their record while the benefit is suspended. It’s important to note that there is an exception here for divorced spouses, but it doesn’t appear to apply to your situation. (If you have other questions about when and how to file for Social Security, consider matching with a financial advisor.)
Exceptions to These Rules
These rules – which closed some big loopholes – apply to most people. However, there are still exceptions that may help some claim two types of Social Security benefits:
- Widows and widowers may claim survivor benefits independently of their retirement benefits.
- If you are filing for disability benefits you are not deemed to have filed for your own retirement benefit.
- You can receive spousal benefits while caring for a retired worker’s child without being deemed to have claimed your own retirement benefit.
- A divorced spouse can continue to receive their spouse’s benefit even if the ex-spouse suspends their own benefit.
Bottom Line
People can no longer accrue delayed credits on their own record while they receive spousal benefits due to the Bipartisan Budget Act of 2015. If you file for a spousal benefit at your full retirement age you are deemed to have filed for your own benefit and will forfeit the chance to max out your own Social Security.
Social Security Planning Tips
- A financial advisor can help you decide when to claim Social Security and build other streams of retirement income. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A Social Security bridge is a strategy that some retirees use to delay their benefits until age 70. However, this means they must rely on savings, retirement account withdrawals and other income sources while their benefit accrues delayed credits.
- Get retirement planning and investing tips with the SmartMoney Minute newsletter. It’s 100% free and you can unsubscribe at any time. Sign up today.
Brandon Renfro, CFP®, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Please note that Brandon is not a participant in the SmartAdvisor Match platform, and he has been compensated for this article. Questions may be edited for clarity or length.
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