Q & A
Social Security said my wife can’t get spousal benefits…but why?
Complete Question: I turned 66 in January 2015 and my wife is going to be 63 in April. After looking into Social Security filing options, we kept hearing about “file and suspend” and thought this would be a great option for us. We were warned that I would have to be full retirement age to choose this option, so we waited until this month, February, to make sure we would qualify. So I went ahead and put in my application as a file and suspend. When the application was processed, my wife applied for her spousal benefit. As far as we knew from everything we heard, we did everything correctly and were following the rules. But then Social Security said no to her. They said she needs to get her own benefit and she can’t get the spousal benefit. They wouldn’t provide an explanation except that the rules state that she has to apply for her benefit first. I don’t get it – did we do something wrong?
Answer: No, you did not do anything wrong. Unfortunately, however, you probably just did not have all the information to find out that this option was not available to you. There is a lot of advice out there about maximizing strategies and one of the most popular is “file and suspend”. However, the rules are a bit more complex than the general “umbrella” advice that is being provided. It sounds like you and your wife got hit by one of these more complex rules that do not affect everyone who is using the file and suspend strategy.
Everything you mentioned is absolutely correct, including the part where the Social Security Administration (SSA) is forcing your wife to file for benefits based off of her own record first – before she can file for spousal benefits. In general, what happens is that the SSA looks at both benefit amounts and whichever amount is higher is the amount that will be paid. For example, you said you are 66 and she is 63 (we’ll use a benefit start date of April, so she will be exactly 63). Let’s say your primary insurance amount (PIA), which is the benefit amount that the SSA estimates you will receive at full retirement age, is $1,500. Even though your wife is 63, the SSA will have an estimated PIA for her – let’s say that amount is $1,200. At the age of 63, your wife’s spousal benefit off of your record would be $562.50/month ($1,500 x 50% = $750 x 75% = $562.50). At the same age, your wife’s benefit on her own record would be $960/month ($1,200 x 80%). Therefore, the SSA will see that your wife’s benefit on her own record is higher and pay that amount instead of the spousal benefit.
This may seem very frustrating. The reason for the file and suspend option is for spouse’s who have little to no benefit on their own record. However, this does not mean you have no other options. If you want, you can file a restricted application. This option is also only available if you are full retirement age, which you are. In this situation, you would be the one getting a spousal benefit. However, the restricted application option would allow you to receive ONLY the spousal benefit, regardless of which benefit is higher (yours or spousal) and let your own benefit grow and earn delayed retirement credits. Is there a catch? Of course. Just like with file and suspend, the “insured” has to file his/her benefit. If you are the one getting the spousal benefit (meaning your wife is the “insured”), then your wife has to file for her own benefit. So using the above amounts ($1,500 PIA for you/$1,200 PIA for her), what exactly does this mean? Your wife files for her own benefit and receives $960/month. You file a restricted application and receive a spousal benefit of $600/month ($1,200 x 50%). When you are ready (up to age 70), you reinstate your own benefit and earn delayed retirement credits. At the age of 70, your benefit under this example would be $1,980/month ($1,500 x 132%) plus cost-of-living increases.
Also keep in mind that since you already tried to file and suspend, you may have to withdraw your previous application in order to file a restricted application. Typically this would require paying back any previous benefits, but you have not received any yet, so you would not have to worry about that part of it. Just be careful when filing a new application that the decision is exactly what you want and is applicable to all the rules – even the fine print.
I hope this helps to clarify what happened to your wife’s application and help you decide where to go from here. There are actually a lot of options for people – everyone just needs to understand that the various options do not work for every situation.