Page 18 - South Mississippi Living - August, 2017

COASTNOTES
FINANCIALFUTURES
Keys to Maximizing Lifetime Social Security Benefits
Leveraging Spousal Benefits Using a Restricted Application
story by Suzie Sawyer
The Bipartisan Budget Agreement
of 2015 will eventually eliminate
the strategy to leverage spousal benefits using a restricted application. However, if you were born on
January 1, 1954 or earlier, you can
still implement the strategy below. If you do not meet the deadline to file, you will be deemed to be filing for all the benefits you are entitled to and Social Security will pay out the largest benefit for which you qualify.
This strategy works for married couples in which both spouses
are entitled to Social Security
benefits on their own work records. Understanding this strategy requires us to flip our thinking – usually, the higher-earning spouse (as the primary earner) claims Social Security benefits and the lower earner collects spousal benefits based on the primary earner’s work record.
You cannot claim spousal benefits until your spouse has filed for or is receiving benefits. Here’s how the strategy works: The lower-earning spouse files for Social Security as early as age 62. Upon reaching full retirement age (FRA), the higher
earner files a restricted application for “spousal benefits only.” The higher- earner then receives spousal benefits based on the lower-earning spouse’s work record. Meanwhile, the higher- earning spouse accrues delayed retirement credits (DRCs) on the benefits based on his/her own work record. The DRCs accrue at a rate of 8% per year of the higher earner’s FRA amount (simple interest) until he/she reaches age 70. Then, he/she stops their spousal benefit and starts his/her worker’s maximized benefits.
Here’s an example: John is age 66 (his FRA) with a $2,000 per month FRA amount. Jane is age 62 with a $1,300 per month FRA amount. Jane files for her own benefit and receives a permanently reduced amount
of $975 per month. Since John has reached FRA, he can file a restricted application for “spousal benefits
only” based on Jane’s work record and receives $650 per month (50% of Jane’s FRA amount). Now, John’s worker’s benefit earns DRCs until he’s age 70 and then receives 132% of his FRA amount ($2,640 per month). He would also receive each annual cost of living
Article provided by Suzie P. Sawyer, Managing Director/Investment Advisor Representative of Trinity Investment Services, LLC, who can be reached at 228.864.4460. Securities offered through Century Securities Associates, Inc., Member SIPC and FINRA, a subsidiary of Stifel Financial Corp.
Home Office: 501 North Broadway, St. Louis, Missouri 63102, 314.342.4051.
adjustment, if it exists.
The key is for the primary earner
to be at their FRA. You cannot file a restricted application prior to your FRA.
18 SOUTH MISSISSIPPI Living • August 2017
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