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Social security: how to get free spousal benefits

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Married couples can use various claiming strategies to boost income from Social Security. One tactic provides "free" spousal benefits.

"I have a few cases in which this is working well," says Susan John, president of Financial Focus, a financial planning firm in Wolfeboro, N.H.

To see how this method works, suppose Bob Brown, the main family breadwinner, starts his Social Security benefits at age 66, currently the official full retirement age (FRA). Once Bob claims his benefit, his wife Mary can claim a spousal benefit: by waiting until age 66 to make this claim, Mary can receive 50% of John's FRA benefit.

Once Mary is in the system, receiving a spousal benefit, Bob can suspend his benefit, returning any Social Security payments he received in the interim. Even though Bob no longer receives his benefit, Mary can continue to collect her spousal benefits. If Bob was receiving the current maximum benefit for someone retiring at FRA--$2,663 a month--Mary's spousal benefit would be $1,331 a month, or nearly $16,000 a year. From age 66 to age 70, Mary would receive around $65,000, including any cost-of-living adjustments.


That $65,000 would be "free" because Mary's own benefit continues to increase by 8% a year, until age 70. Then Mary can switch to her own maximum benefit, if it's higher than the spousal benefit. Bob, meanwhile, can resume his own benefits at age 70, getting the full credit for the delayed start.

"My clients include a couple who were both high income earners," says John. "The wife retired early. Now she is collecting one-half of her husband's Social Security benefit while he continues to work. They will both collect their enhanced benefit at age 70. Having always been in the highest tax bracket, they feel some personal satisfaction at getting some benefit now."

John also mentions another client: a divorced woman who had not remarried. "She was able to convince her ex-husband to file and suspend so that she could receive benefits before he did," says John. "This worked out well for my client because she was unable to continue to work but not sufficiently disabled to collect Social Security disability benefits." Instead, she is getting a spousal retirement benefit.

In this case the couple had been married for many years and the negotiation was part of the divorce planning, John adds.

But rules on spousal benefits are complex and filing and suspending may not be necessary. On the Social Security website the rules say: "If your ex-spouse has not applied for retirement benefits, but can qualify for them, you can receive benefits on his or her record if you have been divorced for at least two years."


Juli Erhart-Graves, president of Worley Erhart-Graves Financial Advisors in Indianapolis, is now working with clients who'll use the file and suspend approach. "The husband retired last year and turns full retirement age in December," says Erhart-Graves. "His wife is already full retirement age and is still working. The husband couldn't believe this was allowed because it is free money for those who can afford to do it. I assured him that they can do this since they have other resources to pay their bills now."

Erhart-Graves cautions that both spouses must have reached their full Social Security retirement age for this to work. As the Social Security Administration explains, "If you are under full retirement age when you take a spousal benefit, you cannot abstain from taking a benefit on your own record, and thus, you will be stuck with a permanently lower benefit."

Donald Jay Korn is a Financial Planning contributing writer in New York. He also writes regularly for On Wall Street.

This story is part of a 30-day series on Social Security and retirement income strategies.

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