Q & A
What’s the difference between File and Suspend and Restricted Application?
Complete Question: Even though I’m 66, I’m not ready to retire. If I did, my Social Security benefit would be $1,500. My wife, on the other hand, is 64 and she was forced into early retirement, so she wants to start collecting Social Security now. Her full retirement benefit is $1,200, but many people suggested that we use the “file and suspend” strategy so that she can collect a spousal benefit and earn delayed retirement credits. But when we tried, the Social Security office said that won’t work. So a friend of mine suggested we try a “restricted application”. Isn’t that the same thing? If not, what is it and how would it help us?
Answer: The major difference between “file and suspend” and “restricted application” has to do with who files and who gets the spousal benefit. Also, the person applying for one of these options has to be full retirement age, which in this case is you. Therefore, if you were to file and suspend, that means that you would file for your benefit and then suspend it so that you can earn delayed retirement credits and your wife can receive a spousal benefit. However, at age 64 and based on the amounts you provided, her spousal benefit would be $625 while her own benefit would be $1,040. Since Social Security will pay whichever benefit is higher (because she is younger than full retirement age), they will pay her the $1,040 off of her own record.
The reason why it was suggested to you to try a restricted application is because it will give you the option to get a spousal benefit off of her record even if it is lower than your own benefit. However, she would have to file for her own benefit first in order for you to do this. So what would happen is that she would get $1,040 per month off her own record, you would get a $600 spousal benefit, and you would continue earning delayed retirement credits. Then at the age of 70 you would be able to reinstate your own benefit and get $1,980/month ($1,500 x 132%).
C.J. Miles, MSA, MBAHCM
Research Analyst & Certified Social Security Advisor
AMAC Foundation
Notice: If you have any additional questions about filing options, or any other Social Security issue, you can reply below. When replying to this website, please do not provide any personal identification information, such as Social Security numbers. If you would like to discuss your situation privately, you can email C.J. Miles at [email protected].
Upon reaching 70 does the beneficiary need to contact the SSA to reinstate their own benefit after drawing their spousal benefit? Thanks.
Yes, if you have been collecting a spousal benefit under a “restricted application,” you will need to contact Social Security directly and make an appointment to apply for your Social Security retirement benefit. You can contact Social Security at 1.800.772.1213, or at your local office, to make an appointment to apply for your retirement benefits.
Russell Gloor
National Social Security Advisor
The AMAC Foundation
In the scenario above, if the husband files a restricted application at his full retirement age, but then earns income between then and age 70, will his benefit at age 70 be larger than the $1,500 x 132% (that is, if the income he earns counts as one of his 35 largest income years)?
Thanks
Malcolm,
The credits earned by delaying past your full retirement age are applied to your Primary Insurance Amount (PIA), which is based upon your highest earning 35 years (adjusted for inflation). Your PIA is adjusted annually as necessary if your current earnings are high enough to replace any of those in the 35 years used to compute your PIA. So, yes, your earnings while collecting under the restricted application will be considered when you apply for your own benefits at age 70, and if any of those earnings are more than those in the 35 years used to originally compute your PIA, then an adjustment will be made and the delayed retirement credits (DRCs) earned by waiting will be applied to the higher PIA.
Russell Gloor
National Social Security Advisor
The AMAC Foundation
Won’t this option no longer exist with the new bill?
http://www.forbes.com/sites/kotlikoff/2015/10/30/quit-aarp-for-endorsing-bipartisan-bill-cutting-millions-of-baby-boomers-social-security-benefits/
http://www.investopedia.com/articles/professionals/111015/social-security-file-and-suspend-claiming-strategy-ending-now-what.asp
You are correct. However, the bill does allow for grandfathering of these two options for six months after the signing of this bill (the Bipartisan Budget Act of 2015).