Social Security – Taking a Closer Look at A Restricted Application

Maura Schauss |

By Todd I. Youngdahl, CFP®

After decades of hard work, retirement is the time to enjoy the fruits of your labor and live your retired life on your own terms. However, achieving financial security in retirement is no easy task and there are plenty of factors to consider when determining whether or not you have enough retirement income to make your ideal retirement a reality.

A key ingredient to building a sustainable stream of income is how you claim your Social Security benefits. Unfortunately, according to a survey conducted by Bankrate, almost 20% of Americans are concerned they won’t be able to cover basic expenses when they retire and also worried that Social Security either won’t be around or won’t provide enough money to live well when they retire.[1] If almost one-fifth of Americans believe their Social Security benefit will not even pay for their daily needs, then what is the point of it? Pre-retirees need to be aware of the benefits that the Social Security Administration allows them to take advantage of in order to maximize the amount they receive. One of the most beneficial features of Social Security is called a Restricted Application.

What Is A Restricted Application?

A Restricted Application is a strategy that lets you receive spousal benefits of up to 50% of your spouse’s current benefit while simultaneously delaying your benefit for the future so it can grow by 8% per year up to age 70. To qualify for this strategy, you must:

  1. Be full retirement age and born on or before January 1st, 1954
  2. Not have started receiving your own benefit
  3. Have a spouse who is currently receiving their benefit[2]

For example, Mike was born on May 5th, 1953, turned 66 in 2019, and has not filed for his Social Security benefits. His wife, Mary, is 66 but is collecting her benefit now. Mike could file a Restricted Application and collect 50% of his wife’s Social Security as a spousal benefit. Mike could then delay his benefit until he is age 70 and allow it to grow by 8% each year before he switches to his own benefit in 4 years.

Restricted Application In Special Circumstances

Additionally, you may also qualify for a Restricted Application if your spouse or ex-spouse is deceased. The advantage in this scenario is that you do not have to be at Full Retirement Age to be able to claim a survivor’s benefit for several years while allowing your own benefit to continue to accumulate until age 70. If you are divorced, you can also benefit from Restricted Application if you meet these qualifications:

  1. Your ex-spouse is at least 62 years old.
  2. Your divorce was finalized more than two years ago.
  3. You were born on or before January 1st, 1954.
  4. You’ve reached Full Retirement Age yourself.[3]

Lastly, you may also file a Restricted Application if you care for a child who is either under the age of 16 or a disabled adult child who is entitled to Social Security benefits. The caregiver may have the opportunity for a Restricted Application even if they have not reached Full Retirement Age.[4]

Don’t Take Chances With Your Social Security Benefit

Social Security is a crucial aspect of many Americans’ retirement plans. In fact, the Social Security Administration reports that of retirees receiving benefits, 48% of married couples and 69% of single people receive more than 50% of their income from their benefits.[5] That’s just one reason why it is important to understand the rules to maximize your benefits as much as possible. If you qualify for any of the three Restricted Application scenarios above, you should consider taking advantage of these rules while you still can. If you need help with your Social Security claiming decisions or want to know how they fit into your overall financial plan, Washington Wealth Advisors is here to help. Call our office at 703.584.2700 or schedule a no-obligation complimentary initial consultation.

About Washington Wealth Advisors

Washington Wealth Advisors is an independent registered investment advisory firm serving high net worth families and small businesses. We focus on holistic financial planning and comprehensive investment management. Leveraging our core strengths of unbiased, active investment management together with a detailed annual financial planning capability, we serve your comprehensive investment and financial planning needs.