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timjet · 11-20-2018, 05:57 AM

DW and I are both 68. I applied for SS benefits (retirement benefits) and was told we are eligible for a benefit called Restricted Application. The agent at SS couldn't explain it in a way I could fully understand so our application for SS benefits are on hold until I can understand this.

Restricted Application allows the lower earning spouse to apply for their retirement benefits (after normal retirement age) and receive in addition to their SS benefits an additional amount until the higher earning spouse reaches 70 and starts taking their SS benefits. The additional amount by restricting the application can be considerable. It is my understanding that the higher earning spouses benefit is unaffected. I'm not sure if the higher earning spouse must wait until turning 70 to take benefits.

One must consider the loss of monthly benefit from the lower earning spouse by taking SS early (before 70) but some of this is off set by the additional money provided by the Restricted Application. Restricted Application terminates when the higher earning spouse takes SS benefits.

Since our normal retirement age is 66 and we are now 68 I don't know if SS will back date our Restricted Application 2 years and pay us the Restricted Application amount for the last 2 years if we decide to take the Restricted Application.

Restricted Application is not the discontinued File & Suspend program that terminated in 2015.

Anybody have any insight into this.

Big Bear Local · 11-20-2018, 07:08 AM

The higher earner (wife) draws on her account. Myself draws as spouse off her account until I reach 70. Then I will draw my full amount from my account. Her amount does not change even when she reaches 70.

wnytaxman · 11-20-2018, 08:03 AM

There is a pretty good explanation of the benefit in this Forbes article.

https://www.forbes.com/sites/tomhage.../#4c41be4b5ba1

Basically it allows the lower earning spouse to collect benefits now while the higher earning spouse can continue to accrue credits up to age 70. It can be a pretty good deal and somewhat like the old "file and suspend" tactic that was eliminated a few years ago.

Winemaker2 · 11-20-2018, 09:44 AM

Quote:

Originally Posted by Phoenix2551

The higher earner (wife) draws on her account. Myself draws as spouse off her account until I reach 70. Then I will draw my full amount from my account. Her amount does not change even when she reaches 70.

I don't think so... see the article wnytaxman linked - it is helpful...

Let’s review the basics of spousal benefits. There are two key points relating to spousal benefits you need to know:

Generally, to receive a spousal benefit, your spouse must be receiving benefits.
If your spouse is not receiving their retirement benefits, you cannot apply for spousal benefits.
There is an exception to this rule for independently entitled divorced spouses.
This article focuses on currently married individuals.
If you have your own retirement benefit, you always are paid your retirement benefit first.
If spousal benefits are available, they are layered on top of your retirement benefit.
Effectively, spousal benefits are made up of two benefits.
Many articles state you will be paid the higher of the two benefits, but really it is a combination of both benefits.

AudiDudi · 11-20-2018, 09:57 AM

I am currently drawing spousal from my wife. She filed early 5 yrs ago at age 62 - what's nice is that the amount I get is 50% of the amount she would have reveived had she waited to file at 66, her FRA, so I am actually getting about 67% of her current, reduced benefit.

michaelbuble · 11-20-2018, 10:00 AM

Hello.
You can message me privately to discuss about this, I'm a Financial Expert by profession and I can explain to you on how to go about this

Solo_RV_Guy · 11-20-2018, 10:11 AM

Quote:

Originally Posted by michaelbuble

Hello.
You can message me privately to discuss about this, I'm a Financial Expert by profession and I can explain to you on how to go about this

Michael Buble? LOVE your new album!!!

Oh, different Mike? Oops! /lame humor

As this thread is specifically about Restricted Application any general info you can share would be welcome. I'm not advocating you give specific advice or practice your profession on the forums, simply that you and wnytaxman are uniquely qualified to comment on and explain this subject.

timjet · 11-20-2018, 01:16 PM

Quote:

Originally Posted by Phoenix2551

The higher earner (wife) draws on her account. Myself draws as spouse off her account until I reach 70. Then I will draw my full amount from my account. Her amount does not change even when she reaches 70.

I think you have that backwards. The lower earner spouse starts taking SS and in addition to her SS payments you can get the restricted application payments. When the higher earning spouse turns 70 the restricted application payments end.

This may not be for everyone. The downside is if you apply for restricted application the lower earner starts taking SS at the time of application and no longer can accrue the 8% per year increase in SS benefits. The restricted application benefit stops when the higher earning spouse applies for SS benefits.

Both DW and I are 68 and I am the higher earner. She takes SS now and gets a restricted benefit of approx $800, but for only 2 years. By taking SS now she gets $330 less than if she had waited until 70. So get $800 now and for 2 years or wait until 70 and get nothing now but $330 for the rest of her life.

My financial advisor is advising we forego the restricted application. The break even age she calculated is 84 yo. IE: If we live longer than 84 we will come out better not taking restricted application. My Dad died at 95.

At least this is how I understand it works.

timjet · 11-20-2018, 01:25 PM

Quote:

Originally Posted by wnytaxman

It can be a pretty good deal and somewhat like the old "file and suspend" tactic that was eliminated a few years ago.

I think the big difference between the file & suspend and the restricted application is the F&S allowed the lower earning spouse to receive F&S benefits without taking SS benefit allowing their benefit to continue to grow. There was no downside expect the higher earner couldn't take SS.

The restricted application benefit requires the lower earner to take SS at time of application.

wnytaxman · 11-20-2018, 01:25 PM

Tim, when and how to take Social Security is always a tough question. When clients ask me that question I always respond that I can answer them specifically if they can answer one question for me. When are you going to pass away? In your case it sounds like longevity may be in your genes so it may behoove you to wait. We never know what's best until we reach the end of the road unfortunately.

timjet · 11-20-2018, 01:36 PM

Yes so true. In talking to some of my friends and co workers there seems to be a mentality that you should get as much from SS as you can and that seems to lead to the decision of taking SS as soon as you can.

My focus has been to attempt to duplicate my working income in retirement via SS and private pension. To do that I've had to delay taking both. It's probable that if I die before 84 I will have left a ton of money on the table, but my focus is income, so I'm willing to take the chance that I may leave uncle Sam an inheritance.

AudiDudi · 11-20-2018, 02:03 PM

You might try running the $40 software from Kotlikoff, author of Get What's Yours. I've read the book but have not purchased the software as I already knew what to do to maximize my benefits (my break even is at ~age 76).

Here's a link if you want to the website:
https://maximizemysocialsecurity.com/

Another thing to consider is if Congress doesn't act, at this point in time it is projected that SS payments could be reduced by ~23% around the year 2034. So, does one believe that will/might happen and try to get as much between now and then or does one have faith in Congress to act in the very near future to prevent that?

Big Bear Local · 11-20-2018, 02:13 PM

Quote:

Originally Posted by Phoenix2551

The higher earner (wife) draws on her account. Myself draws as spouse off her account until I reach 70. Then I will draw my full amount from my account. Her amount does not change even when she reaches 70.

To clarify this my wife retired a year before I did. So when I went to file I filed as a spouse and deferred mine until 70. Making my benefit larger than if I filed on my own at 66.

timjet · 11-20-2018, 02:56 PM

Quote:

Originally Posted by Phoenix2551

To clarify this my wife retired a year before I did. So when I went to file I filed as a spouse and deferred mine until 70. Making my benefit larger than if I filed on my own at 66.

Yes you are correct, you can take the restricted benefit on either spouse. I was wrong in my earlier post. I just talked to SS and they confirmed that.