OK, it's official. I'm going to call this column, "How to maximize your Social Security benefits" and spend the rest of my life answering questions about that issue. I'd guess that 80% of the emailed questions I've been getting lately come from readers who are confused about the strategy called "file and restrict." In a nutshell, that procedure allows someone who is turning 66 before Jan. 2, 2020 to file for spousal benefits on a husband's or wife's Social Security record and then at 70, switch to 132 percent of his or her own retirement benefit. Here is a sample from the emails I opened up this morning.
Q: I am about to turn 66 and my husband is 68. Neither of us has filed for Social Security. We want to save our benefits until we are 70. We went to our local Social Security office so that I could file and restrict on my husband's record while we both wait to start our own Social Security at 70. But they said in order to do that, my husband would have to file for his benefits now. So are they wrong? Or are we wrong?
A: You are wrong and they are right. If you want to claim spousal benefits on your husband's record, he must be getting his own Social Security retirement benefits first. So if you both want to wait until you are 70 before starting your Social Security benefits, you can't play this file and restrict maximizing game. You need to sit down with a calculator and go over the numbers. Would you be better off if he took his Social Security now so you could claim spousal benefits and then switch to your own at 70? Or would it be a better deal for both of you if you each simply waited until you are 70 to start your benefits?
Come to think of it, there is a third option. You could wait two more years until he is 70. Then he could file for his retirement benefits and get the 132 percent rate. At that time (you will be 68), you could file for spousal benefits on his account and at 70, switch to 132 percent of your retirement benefit.
Q: I am 67 and getting my Social Security. My wife turns 62 this month. Can she do the file and restrict strategy? Can she file for spousal benefits on my record now and save her own benefit until she is 66 or even 70?
A: No, she can't. And there are two reasons why she can't do that. First, your wife must be 66 years old in order to employ the file and restrict strategy. Second, by the time she does turn 66, it will be after the Jan. 2, 2020 deadline. So, if your wife wants to start her Social Security at age 62, her only option is to file for reduced benefits on her own Social Security account.
Q: I am trying to help my brother and his wife maximize their Social Security. He will be 66 this October. His wife turns 66 in February 2021. They are both still working and plan to continue to do so. They went to our local Social Security office and were told that they cannot use the file and restrict strategy because it is scheduled to end on Jan. 2, 2020 and his wife doesn't turn 66 until February 2021. Are they right?
A: No, they are wrong. The file and restrict strategy doesn't really end on Jan. 2, 2020. The strategy can still be used after that date, as long as the person using the strategy was 66 years old before then. And your brother meets that criteria. You said he will be 66 in October 2019. So he can file and restrict on his wife's Social Security record. But he can't do that until she files for retirement benefits when she turns 66. To summarize: In February 2021, your sister-in-law should file for retirement benefits. Then at the same time, your brother will file for husband's benefits on her record. He will get an amount equal to one-half of her benefit. Then at 70, he can switch to 132 percent of his own.
Having said all that, your brother has to consider his other alternative. He could simply file for his own retirement benefits when he turns 66 and forget about all of this file and restrict stuff. Why would he want to do that? Because he would be throwing away an awful lot of money between October 2019 and February 2021 just to get that spousal rate for a few years before switching to his own benefits at 70.
Let's make up some numbers and see how it plays out. I'll call your brother Fred and say his full retirement age benefit is $2,600 per month. And let's say his wife, Wilma, has a full retirement benefit of $1,800 monthly.
If Fred does the file and restrict thing, his wife will file for her benefits in February 2021. She will start getting $1,800. And then Fred will file for spousal benefits on her record and get $900 per month. He will get that rate until he turns 70 years old in October 2023. So he will get 32 checks at $900 per month or $28,800. Then starting at age 70, he will switch to 132 percent of his retirement check, or $3,432 monthly for the rest of his life.
Fred's other option would be to file for his full retirement benefits at 66 and forget about this file and restrict business. So, he would start getting $2,600 per month in October 2019. In this option, he would get 48 Social Security checks between now and age 70, for a total of $124,800. That's $96,000 more than he would get in spousal benefits during the same time period if he chooses to file and restrict. But under that latter strategy, he would start getting an extra $832 per month from age 70 on. It would take Fred about 115 months, or roughly nine and a half years, to make up the money he would lose if he doesn't file for benefits now.
Of course, his real choices depend entirely on what their actual benefits rates are. But your brother's bottom line issues are these: Does he want more money upfront by filing for his benefits in October? Or does he want extra money in the long run by waiting until February 2021 to file and restrict on his wife's account?
Oh, and there is one other consideration. If he does the file and restrict option, and assuming your brother dies first, his wife will get higher widow's benefits. She will get his enhanced age 70 rate as opposed to his age 66 benefit.
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If you have a Social Security question, Tom Margenau has the answer. Contact him at thomas.margenau@comcast.net. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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Published: Thu, May 23, 2019
