Maximizing Social Security – Time is Running Out for “Claim Now, Claim More Later”

The Bipartisan Balanced Budget Act of 2015 introduced substantial changes to Social Security law. Specifically, the new law has limited Social Security claiming strategies that would have resulted in more retirement income for you and your spouse. Time is running out to use these strategies that maximize Social Security.

Two popular Social Security claiming strategies that provide more Social Security dollars are the “Claim and Suspend” and “Claim Now, Claim More Later” options. Unfortunately, the use of the “Claim and Suspend” strategy was eliminated as of the end of April, 2016. But time still remains to use the “Claim Now, Claim More Later” if you were born on or before January 1, 1954.

As a spouse, you can collect a spousal benefit of 50% of the amount of your spouse’s Social Security benefit as calculated at their full retirement age (FRA).

You are automatically entitled to receive the benefit that provides you the higher monthly amount; either a benefit based on your own earnings, or a spousal benefit based on your spouse’s or ex-spouse’s earnings, and prior to reaching FRA, Social Security makes this determination for you.

If you were born on or before January 1, 1954, after you reach FRA, you can choose to receive only the spousal benefit by filing a restricted application.

By doing this you delay receiving your retirement benefits based on your earning’s record until a later date. For example, at age 70 you could switch from receiving a spousal benefit to receiving your own potentially higher benefit amount. The amount of your own benefit (which you have not activated yet) grows by 8% per year plus cost of living increases. By using this “Claim Now, Claim More Later” you get “extra income” while waiting to turn on your age 70 benefit.

Due to the new Social Security laws that went into effect Nov. 2, 2015, if you were born on or after January 2, 1954 you will not be able to restrict your application and only receive spousal benefits (Use the “Claim Now, Claim More Later” strategy). For anyone born on or after January 2, 1954, when you file you will automatically be deemed to be filing for all benefits you are eligible for*.

Many don’t understand all of the claiming options that are available to them, especially creative uses of the spousal benefit. Most understand that a spousal benefit would only be used by a husband or wife that did not have their own Social Security benefit. Not true.

If you have any questions about strategies discussed in this article, please contact me.

*Adapted from the article “How the Social Security Spousal Benefit Works” at https://www.thebalance.com/how-the-the-social-security-spouse-benefit-works-2388924