Although Congress last year eliminated two strategies used by married couples to claim Social Security benefits, some investors may still use one of the strategies that is being phased out over a period of time.

As of April 30, couples can no longer utilize a “file and suspend” strategy. But those who reached age 62 by the end of 2015 may use the “restricted application” approach when they reach full retirement age at 66. After that, the strategy will be eliminated.

Since many couples will still be able to benefit from this strategy, it’s important to understand how it works. The best candidates for this approach would be married couples who have both worked, have similar Social Security retirement benefits, and are close in age.

Generally, the lower-earning spouse files for retirement benefits at full retirement age. This allows the higher-earning spouse to restrict his or her application for spousal benefits only while delaying his or her own retirement benefits (preferably to age 70 if possible).

Consider this example:

  • Married couple Mark and Susan are age 66
  • Mark’s monthly benefit is $2,000, while Susan’s is $1,500
  • Susan files for her own monthly benefit ($1,500) while Mark files but restricts his application to “spousal benefits only” (half of Susan’s or $750)
  • At age 70, Mark switches over to his benefit, which is higher due to delayed retirement credits (approximately $2,700)
  • By using this strategy, Mark and Susan have also locked in the highest monthly survivor benefit ($2,700) for whichever one lives the longest

If the restricted application strategy wasn’t available, Mark could have waited until age 70 to claim benefits and lock in the highest living benefit for himself and highest survivor benefit for the surviving spouse. However, he would not have benefited from receiving four years of spousal benefits while he waited to claim his own benefit, which in this case totaled more than $35,000.

Most people plan to rely on Social Security as a source of retirement income. An advisor can help individuals and couples understand the different ways to claim Social Security to try to maximize their benefits. For more details on the key things to know, read Putnam’s investor education article, “Optimizing Social Security.”


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