Secret 2: A Powerful Spousal Strategy Still Exists for Some

The Bipartisan Budget Act of 2015 eliminated some of the most popular Social Security claiming strategies, including “File and Suspend.” The SSA’s website now presents a simplified version of spousal benefits, leading many to believe the days of strategic coordination between couples are over. This is not entirely true.

For a specific group of people, one of the most valuable strategies ever created, known as a “Restricted Application,” is still available. The SSA will not advertise this. You have to know to ask for it, and you must meet a strict criterion: you must have been born on or before January 1, 1954.

If you meet that age requirement, the old rules still apply to you. Here’s how this powerful secret works. Normally, when you apply for Social Security, you are “deemed” to be filing for both your own retirement benefit and any spousal benefit you might be entitled to. The SSA will then pay you the higher of the two amounts. You don’t get both.

However, with a Restricted Application, an eligible individual who has reached their Full Retirement Age (FRA) can choose to file *only* for spousal benefits based on their partner’s work record. This allows their own personal retirement benefit to remain untouched, continuing to grow by 8% per year until they reach age 70.

Let’s look at a strategic example. Meet Tom and Jane. Tom was born in 1953, and Jane was born in 1955. Jane has started her Social Security benefit. Tom has reached his FRA of 66. His own FRA benefit is $2,000 per month. Jane’s benefit is $2,400 per month, so Tom is entitled to a spousal benefit of half her amount, which is $1,200.

Under the new rules, Tom would be forced to take his own higher benefit of $2,000. But because he was born before the 1954 cutoff, he has a better option. At age 66, Tom can file a Restricted Application for spousal benefits only. For the next four years, he will collect $1,200 per month from Jane’s record. That’s $57,600 in payments he would otherwise not have received.

Meanwhile, his own $2,000 benefit is growing by 8% annually. When Tom turns 70, he switches to his own maximized benefit, which will have grown to $2,640 per month (that’s $2,000 x 1.32). He gets the best of both worlds: four years of spousal payments plus a significantly larger personal benefit for the rest of his life. This is one of the most valuable Social Security secrets remaining, but it’s disappearing fast.