Broker Check

$16,000 mistake

February 04, 2019

Couple months ago I met a gentleman at one of my Social Security seminars. Like the other attendees he was trying to figure out the best strategy to claim benefits for himself and his wife.

Let’s call them John and Mary.

After the seminar I sat down with John to gather all the information needed to come up with a plan that would help maximize their lifetime benefits from Social Security.

Their initial plan was to wait until age 70 to file for benefits so that they each would receive the maximum benefit available to them. At the time we met John had just turned 66 (his full retirement age) and Mary was 68. John’s benefit at full retirement age was about $2,400/month, and Mary’s was about $900/month.

After analyzing the claiming strategies available to this couple I realized that waiting until age 70 was not the best option. I told John that his wife should file for her own benefits right away so that he could file a ‘restricted application for spousal benefits’ (which has been eliminated with the Bipartisan Budget Act of 2015 except for those who turn 66 before January 2020).

It turns out that they were not aware of their eligibility to use the restricted application, and were happy that their household income would be increasing by $16,200 annually.

Things got interesting when they went to the Social Security office to file for their benefits: They were told that they could not file for restricted benefits, even though the law clearly states they are eligible. In the end they each filed for their own benefits which will result in lost income.

However, it’s still not a hopeless situation. John’s application can be withdrawn. He then can file a restricted application but he will probably need to talk to someone else at the Social Security office.

Bottom line: Social Security offices do not always provide correct information. Social Security is still complex and you may benefit from talking to a financial advisor about your options.

Please contact me if you (or your parents, friends, co-workers, etc.) would like to have a complimentary Social Security Strategy Report.