Due to the Social Security “Deemed Filing” change introduced on April 30, 2016, persons born after 1953 are limited as to when they can take a spousal benefit. The law eliminates the ability of a spouse to limit the scope of the application to spousal benefits at “full retirement age” if they were born after 1953.
Prior to this change, the strategy used to be to take one-half of their spouses full retirement age benefit but still accrue delayed retirement credits until age 70 (8 percent per year increase). They would continue working but take one-half of their spouses benefit and then switch to their own record at age 70 for a much higher benefit. This is still an option for persons born before 1954.
This rule change also affects when a spouse must take a spousal benefit if eligible before they reach full retirement age. For example: Wife (born in 1954 or later) files for her retirement benefit at age 62 and receives $600/month. Her husband decides to file for his retirement benefit a year later when he is 66. She could file then and take a reduced spousal benefit of about $275/month but is advised by her financial advisor to wait until she turns 66 (full retirement age) to get a higher spousal benefit of $400/month. This is incorrect.
The deemed filing change states she must file immediately for the reduced benefit of $275/month. If she was not entitled on her own record she could wait and file at full retirement age for the highest benefit on her record and her spouse’s record. But she elected a reduced benefit on her record and must take the reduced spousal benefit as soon as it is available.
Note: In the above example if she waits until her full retirement age to file for spousal benefit they will only pay her the $275/month. She will lose all spousal benefits she could have received beginning the month her husband filed.
In 2015, a financial planning firm had advised a client’s wife (born in 1954) to wait until her full retirement age in 2018 to take spousal benefits. When her husband filed, Social Security informed her she must file for reduced spousal benefits right away and could not wait until her full retirement age because she had previously elected reduced benefits on her own record in 2015. The advice was correct at the time provided (2015) but the 2016 changes eliminated the option to wait and get a higher spousal benefit.
This change may be confusing, so please feel free to contact me with any questions you may have.
About Dennis Heywood
Denny’s career with Social Security provides an in-depth, working knowledge of the Social Security Administration’s internal organization and processes. An expert in all phases of SSA programs: retirement, survivor, disability, and Medicare, Denny has expertise with the complex Social Security regulations based on more than 40 years of experience.