SS File Suspend then file restricted for spouse

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trasmuss
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SS File Suspend then file restricted for spouse

Post by trasmuss » Sat Oct 17, 2015 7:05 am

My wife reached full retirement age (FRA) in August. I will reach it in December. I thought I had fully researched the subject and went with the plan for me to file and suspend when I reached FRA and then to have my wife file a restricted application for spousal benefits only. Then we would both continue to earn delayed credits and file for benefits when we each reach age 70.

I called social security in September when I was within 90 days of my FRA. They said I would need to go to a local office to do what I wanted and that it could not be done online or over the phone. They said the calendar for December wasn't out yet and to call back in October for an appointment.

Okay, I did all that and recently went to our local office. I had based our plan on the assumption that we couldn't do what we wanted until both of us reached FRA.

I was wrong and it likely cost us thousands. The lady we met with was very experienced. She suggested that I file for benefits starting before my FRA and then suspending them after two payments (I am assuming two payments because that would then bring me to FRA). My wife could then immediately file for a restricted application and we would both then start receiving money in October (me for two months and her until age 70 when she would then start regular benefits). She said that if I had made an appointment in September instead of October my wife could have received an extra month of spousal benefits.

Once she explained this option I asked whether I missed the boat then by not coming earlier. She said yes and that my wife could have been drawing the spousal benefits for more months. Possibly since I turned 62? I didn't ask more questions because I was still beating myself up for not understanding this option.

The only purpose of this posting is to pass this on to those who may be in similar circumstances. My advice for those who are married and wish to continue accruing benefits would be to contact social security and probably meet with a social security representative to be sure you understand your options. I would probably do this when you are both eligible to start receiving benefits at 62. Then work out your own plan based on your individual circumstances.

I can't say I fully understand how it works even at this point. I guess I should just be happy that we get a couple of months extra of spousal payments over what I was expecting. And a couple of months of my benefits which will offset the twenty some dollars a month of reduced benefits at age 70. But I'm still unhappy with myself for assuming that I knew how it worked.

pshonore
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Re: SS File Suspend then file restricted for spouse

Post by pshonore » Sat Oct 17, 2015 7:45 am

Your wife cannot file for a spousal benefit and allow her own benefit to grow until 70 unless she is FRA. The earliest she could have filed was August in that scenario (assuming you filed). Stop beating yourself up.

trasmuss
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Re: SS File Suspend then file restricted for spouse

Post by trasmuss » Sat Oct 17, 2015 7:56 am

Thanks for the information. It does soften the blow.

I still missed August and September, however, so I still missed out on about $2500. Hopefully my post will help someone in similar circumstances.

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tfb
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Re: SS File Suspend then file restricted for spouse

Post by tfb » Sat Oct 17, 2015 9:06 am

trasmuss wrote:Thanks for the information. It does soften the blow.

I still missed August and September, however, so I still missed out on about $2500. Hopefully my post will help someone in similar circumstances.
The real lesson is don't take advice from customer service people. Getting a one-time payment for a couple of months at a cost of a permanent reduction for years on end may not be a good idea. Use online calculators, both free and paid (~$50). The reps mostly deal with people who want more money now. They will tend to steer people to more money now.
Harry Sit, taking a break from the forums.

Ron
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Re: SS File Suspend then file restricted for spouse

Post by Ron » Sat Oct 17, 2015 9:12 am

tfb wrote:<snip...> The reps mostly deal with people who want more money now. They will tend to steer people to more money now.
True.

They are there to give you the results of what you are eligible for today (assuming you are of SS age); they are not there to give you financial advice on what you should do, nor how you should handle your SS claim(s) based upon your future financial goals.

It's no different than any other financial transaction (either saving/investing or spending). It's up to you to do the research. They are just there for the execution phase.

- Ron

ralph124cf
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Re: SS File Suspend then file restricted for spouse

Post by ralph124cf » Sat Oct 17, 2015 1:09 pm

I think that the SS person that you spoke to at the office appointment may have given you advice that is not in your best long term interest. I am sure that she was correct about what you are entitled to now, but she may not be financially sophisticated enough to understand your long term goals of maximizing your SS income.

We have a number of people on this board that can explain this much better than I can, so I hope one of them will explain this.

Ralph

trasmuss
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Re: SS File Suspend then file restricted for spouse

Post by trasmuss » Sun Oct 18, 2015 5:28 am

Getting about $8,000 cash now for an income stream of less than $30 a month in four years sounds like a pretty good deal. I don't remember the exact amount but it was two spousal payments and two of my payments (before suspension).

I agree that having to decide this while sitting in front of her as opposed to having it figured out in advance was not good. But in all of the reading I've done on the subject including this board, I don't remember the option ever being discussed. If I had known about it I could have done some calculations in advance.

Based on other things in social security getting the two payments early for a reduction once I'm 70 is very likely to be actuarially equivalent if I live a normal lifespan. That leaves the two spousal payments of about $2500 which to me means if I live a normal lifespan I am ahead $2500 in current dollars by taking the deal she proposed. Maybe correct, maybe not.

JW-Retired
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Re: SS File Suspend then file restricted for spouse

Post by JW-Retired » Sun Oct 18, 2015 7:21 am

trasmuss wrote:Getting about $8,000 cash now for an income stream of less than $30 a month in four years sounds like a pretty good deal. I don't remember the exact amount but it was two spousal payments and two of my payments (before suspension).

I agree that having to decide this while sitting in front of her as opposed to having it figured out in advance was not good. But in all of the reading I've done on the subject including this board, I don't remember the option ever being discussed. If I had known about it I could have done some calculations in advance.

Based on other things in social security getting the two payments early for a reduction once I'm 70 is very likely to be actuarially equivalent if I live a normal lifespan. That leaves the two spousal payments of about $2500 which to me means if I live a normal lifespan I am ahead $2500 in current dollars by taking the deal she proposed. Maybe correct, maybe not.
If your PIA is roughly $2500 then two less months of delay will eventually cost you (& usually your survivor spouse) 4/3% x 2500 = $33.25/month after age 70. The $8000 cash would buy you an age 70 J&S (non-cola) annuity that pays $42.40/month. (Scaled down from the minimum $10k investment amount on the annuity web site.) https://www.immediateannuities.com/

If we throw in a little Kentucky windage for the fact that SS has a cola and is also more lightly taxed, I think the deal comes out just fair.
JW
Retired at Last

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Artsdoctor
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Re: SS File Suspend then file restricted for spouse

Post by Artsdoctor » Sun Oct 18, 2015 7:23 pm

Hmm. This doesn't sound right, and I suspect Mike Piper will chime in.

Your wife's FRA was in August and she did nothing. Her excess benefits are already accruing.

Your plan was to File and Suspend your benefits are FRA at which point she would then file a Restricted Application for full spousal benefits, which would be half of your regular social security benefit. All the while, you'd both be delaying your regular benefits until age 70.

There's been some debate about couples doing this versus the lower earner claiming full benefits, the higher earner taking spousal benefits, and then collecting augmented benefits at 70. But that debate aside, I think your plan was correct and I don't see any reason to beat yourself up.

All that said, we have a few brilliant social security people on this forum so let's see if we can have a erudite explanation.

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