Question: I have a question concerning my wife drawing Social Security. Can she draw spousal benefits based on my record when she reaches her full retirement age (FRA) on July 2, 2018, based on the facts listed below?
We've been married for more than 30 years. I started drawing Social Security before my FRA, at age 62. My wife has no intention of drawing her Social Security at her FRA, as she wants to continue working until 70 years of age. Her annual income is approximately $210,000 and our joint annual income is about $245,000. My 2017 Social Security benefits were $19,992.
My questions: 1) Can my wife draw spousal benefits at her FRA based on my record even though she continues working? 2) If so, would she draw on my benefits that I am receiving now, or would her benefits be calculated on what mine would have been at my FRA?
Answer: Yes, your wife can draw spousal benefits at her FRA based on your record even though she continues working, says David Freitag, a financial planning consultant at MassMutual.
This is called filing a restricted application for spousal benefits, he says. And, it's allowed under a grandfather clause of the 2015 Bipartisan Budget Act (BBA).
According to Freitag, that law limited restricted filing strategies to people born on or before Jan. 1, 1954. In this case, with a birthday in 1952, she more than qualifies to use this strategy.
Based on an estimate of your benefit at your FRA, using this restricted filing strategy would potentially pay you about $49,000 more than just filing on her own record at her age 70, says Freitag. "It is a super idea and one that used to be available to everyone," he says. "However, as people age, it is now starting to be phased out."
As for your second question, Freitag says your wife would draw a spousal benefit based on your FRA benefit, not the benefit you are drawing now.
"Keep in mind that using the restricted filing strategy means that the survivor benefit is also adjusted up because of delayed retirement credits," Freitag says. "No matter who dies first, the survivor in this case will have locked in the highest possible benefit using those delayed retirement credits."
Read from the Social Security Administration Survivors Planner: How Much Would Your Benefit Be?
In general, Freitag says, the only time you would not want to use a restricted filing strategy would be for those with short life expectancies or important near-term cash flow needs. "When it comes to Social Security filing strategies there is an old saying, 'one size fits one,'" says Freitag. "Each person or couple should model their own facts and make the call based on informed choices."
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