Serious about bugging out and around retirement age? Be prepared to retire. Talk to your employer so you know your options and are ready to act. Below are some Social Security benefit programs no longer available after May 1, 2016:
1) Restricted Application – entitles the lesser overall benefit spouse a monthly payment equal to 50% of the other’s benefit.
Big Earner Spouse (BES) retires at age X
Low Earner Spouse (LES) reaches the above age, files Restricted App (RA) but keeps working. SS pays LES 1/2 of BES SS while she continues working up to age 70.
Note: This looks like success depends on LES having a good income, and will not help a single-income family. It looks like it works best when the LES worked less years than the BES but is currently making good money.
Caution: When you contact Social Security be very specific that you want to restrict to spousal benefits only. If not, your application will be filed as “deeming” and you will be granted the greater of either your worker benefit or your spousal benefit. In Social Security jargon it’s called FAASF – Filing As A Spouse First. Or, as we suspect might be uttered behind the scenes, Forget About Addressing Spousal Funding.
2) Spousal Benefits – when a spouse doesn’t qualify for Social Security because he/she hasn’t worked the 40 quarters (about 10 years) required, or at all. The working spouse has to be eligible for SS, but not necessarily retired, before the non-eligible spouse can do this. The non-qualifying spouse (NQS) gets 50% of the amount that the working spouse (WS) is entitled to. If the NQS applies before retirement age that is reduced to 35%.
3) File and Suspend (FS) – You have to be full retirement age (FRA) of 66 or 67 to do this one.
Older and Bigger Benefit Spouse (OBBS) at FRA files for and suspends SS.
Younger Spouse (YS) can now postpone SS at FRA and get 50% of OBBS benefit.
By delaying worker benefits, both partners will accrue 8% a year in delayed credits until they reach the age of 70.
4) File and Suspend, then Cancel (FSC) – you can cancel your File and Suspend (described above) up to one month before your 70th birthday. You get, as a lump sum, the up to 4 years of benefits that were suspended, but you lose the 8% annual accrued credits.
If OBBS FSCs while YS has delayed benefits, the YS still gets the 8% accrued credits.
More to come…