16 Dec What are Social Security restricted applications?

Q. Social Security’s changes not to allow file and suspend make sense. But they also stopped restricted applications. What were restricted applications?
— Missing out

A. These popular Social Security strategies are no more.

The changes happened to improve the health of the Social Security system.

Both strategies, in essence, allowed married couples to collect higher benefits over their lifetimes.

For restricted applications, one spouse would collect his or her Social Security benefits when the second spouse reached full retirement age, said Steven Gallo, a certified public accountant with U.S. Financial Services in Fairfield. The second spouse was given the option to apply for “spousal benefits” while delaying filing for his or her worker benefit in order to accrue delayed retirement benefits.

Gallo offered this example:

Mr. Jones is 68 years old and collecting his Social Security benefit of $2,000. Mrs. Jones turns 66 and is eligible to collect her full retirement of $950. However, if she defers until age 70, her benefit will increase to $1,250. Under the old rules, she could apply for a spousal benefit of $1,000 (50 percent of her husband’s $2,000 monthly benefit) and then at age 70 apply for her own benefit of $1,250 a month.

“Under the new rules, any individual born after 1954 who files a benefit application will be deemed to have filed for both worker and spousal benefits and will receive the higher,” Gallo said. “They will no longer be able to file only for a spousal benefit.”

You can read here to understand how the file and suspend strategy worked.

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This story was first posted in December 2015.