Col­lect­ing spousal benefits, de­layed re­tire­ment credits

Claim­ing strat­egy only for those born be­fore Jan. 2, 1954

The Morning Call - - BUSINESS CYCLE - By San­dra Block San­dra Block is a se­nior ed­i­tor at Ki­plinger's Personal Fi­nance mag­a­zine. Send your questions and com­ments to mon­ey­[email protected]­plinger.com. And for more on this and sim­i­lar money top­ics, visit Ki­plinger.com.

Q: If I take spousal benefits at my full re­tire­ment age of 66, can I col­lect my own So­cial Se­cu­rity benefits at 70 and col­lect de­layed re­tire­ment credits?

A: Yes, but only if you were born be­fore Jan. 2, 1954. Any­one born on or af­ter that date is pro­hib­ited from us­ing this claim­ing strat­egy, known as re­strict­ing an ap­pli­ca­tion for spousal benefits, be­cause the gov­ern­ment is phas­ing it out.

In ad­di­tion, you must have reached full re­tire­ment age, and your spouse must have al­ready claimed benefits, which means he or she must be at least 62 years old. If you are 66 and your spouse is 60, for in­stance, you would have to wait at least two years to claim spousal benefits.

Here's why fil­ing a re­stricted ap­pli­ca­tion is a smart strat­egy, as­sum­ing you qual­ify: If you can af­ford to de­lay fil­ing af­ter you reach full re­tire­ment age (when you're eligible for 100% of the benefits you've earned), your benefits will grow 8% every year un­til you reach age 70 (af­ter that, there's no ad­van­tage to delaying).

For ex­am­ple, sup­pose you qual­ify for a $2,200 monthly ben­e­fit, and your spouse, who is at full re­tire­ment age, qual­i­fies for a $1,400 ben­e­fit.

You file a re­stricted ap­pli­ca­tion to claim spousal benefits, which are equal to up to half of your spouse's full re­tire­ment age ben­e­fit — in this case, $700 a month. Your com­bined benefits will be $2,100 a month un­til you reach the age of 70.

At that time, you can switch to a ben­e­fit worth $2,904. You and your spouse will then bring in a to­tal of $4,304 a month, plus an­nual cost-ofliv­ing ad­just­ments. And that higher ben­e­fit is the one the sur­viv­ing spouse will keep af­ter the first spouse dies.

If you want to file a re­stricted ap­pli­ca­tion for spousal benefits only, you may need to speak to some­one high up the chain of com­mand at your lo­cal So­cial Se­cu­rity of­fice.

Some So­cial Se­cu­rity rep­re­sen­ta­tives may be un­aware of the strat­egy or think it no longer ap­plies to any­one. You may need to speak to a su­per­vi­sor to re­solve the issue.

If you don't qual­ify to file a re­stricted ap­pli­ca­tion, there are other ways to get the most out of your com­bined So­cial Se­cu­rity benefits.

One op­tion is to have the lower-earn­ing spouse file be­fore full re­tire­ment age, even though that will mean a re­duc­tion in benefits (up to 30% if the spouse files at age 62).

Use that in­come, along with in­come from other sources, to pay ex­penses while the higher earner's benefits — which will get the biggest boost from de­layed re­tire­ment credits — con­tinue to grow un­til the higher earner turns 70.

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