Social Security Now and Later: Spousal/Dependent Benefit Strategy

The rules changed in 2016

Husband and wife playing chess
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Married couples might be able to get more income from Social Security by looking at their options as a couple rather than as two individuals. You have a claiming option available that's sometimes referred to as "double dipping" if one of you was born on or before Jan. 1, 1954. This "collect now and later" strategy provides some income in the present while locking in a higher benefit for later.

Unfortunately, due to changes in the Social Security rules that were signed into law in November 2015, only those who reached age 62 on or before Jan. 1, 2016 can file a restricted application for spousal benefits to utilize this option.

The "Collect Now and Later" Social Security Strategy

The "collect now and later" strategy allows you to collect a spousal benefit while accumulating delayed retirement credits on your own benefit amount. Usually, the higher earner of a couple would consider this so they could get the most possible at age 70. That higher age 70 benefit amount would then get locked in as a survivor benefit.

You must file a restricted application to use this strategy. You must have reached full retirement age (FRA) and your spouse must have applied for benefits.

The "File and Suspend" Approach

The 2015 changes actually eliminated two claiming strategies for a good number of Americans—restricted applications as well as the "file and suspend" approach—unless you're a widow or widower or were born on or before the Jan. 1, 1954 deadline.

If your spouse reached her own FRA prior to April 30, 2016, she had the option to file and suspend benefits. This would have allowed you to collect a spousal benefit immediately.

But that deadline has now passed, and this option has been eliminated for those who turn 66 after May 1, 2016. Those who missed this deadline cannot receive benefits unless their spouses are also receiving benefits. If your spouse suspends her own benefits, this would also suspend any benefits you receive based on her record.

Why Doesn't It Work if You Haven't Reached FRA?

If you apply for Social Security benefits before your full retirement age, you automatically qualify for and are given the higher benefit based either on your own earning’s record or 50 percent of your spouse’s full retirement age benefit. Your benefits are reduced if you're claiming before your own full retirement age.

You have more choices if you wait until FRA to apply, and if you were born on or before Jan. 1, 1954. You can apply for benefits and choose to begin collecting just a spousal benefit based on your spouse’s earnings record, your ex-spouse's if you were married for at least 10 years and you haven't remarried. Your own Social Security benefit would continue to accumulate delayed retirement credits until you reach age 70, then you can switch from taking the spousal benefit to taking your own benefit.

An Example

Kara, age 66, is still working. Her husband Bob is collecting Social Security retirement benefits. Kara was born on or before Jan. 1, 1954, so she files a restricted application for Social Security spousal benefits based on Bob’s earnings record. She collects her spousal benefit while working for the next four years. Then, at age 70, she retires and switches to her own, now much larger Social Security benefit.

Keep in mind that were Kara to continue working up until her FRA, she would lose $1 of her benefits for every $2 she earned over a certain income threshold. The threshold is $17,040 as of 2018. But if you're owed an additional amount because the spousal benefit is larger than your own when your spouse files, this additional amount will automatically be given to you.

Rather than trying to work through all these options on your own, consider using a Social Security calculator to tell you what claiming strategy might work best for you. 

What About the (Grand)Kids?

Minor children—and grandchildren if they're your dependents—can also collect benefits on a retired spouse's earnings record if the parent is receiving benefits or used the "file and suspend" option prior to May 1, 2016.

The child must be unmarried and under age 18, or age 19 if she's still in high school. She's also eligible if she became disabled before the age of 22, regardless of how old she is now.

The amount of benefits is also equal to up to 50 percent of the parent's benefit, and she would be subject to the same income restrictions as an adult if she were to work also: She would lose $1 of her benefits for every $2 she earned over that year's income threshold. Her wages or salary would not affect your benefits, however.

A Word of Warning

The Social Security Administration retains the right to limit overall benefits payable to multiple members of your family. Although your own benefits won't be reduced if your spouse and child are collecting on your work record, total benefits paid to your entire family cannot typically exceed 180 percent of the amount of your full retirement benefits.

An exception to this rule exists if your ex-spouse is collecting on your benefits. This does not contribute to your current family's 180 percent.