COLUMN-'Restricted application' can boost Social Security benefits

(The opinions expressed here are those of the author, a columnist for Reuters.)

CHICAGO, Oct 10 (Reuters) - Waiting until age 70 to claim Social Security benefits is one of the most popular financial strategies for retirement, but it can put couples that retire in their 60s in a bind if they then must wait years for monthly benefit checks to start.

Consequently, financial planners recommend that couples who qualify should use the hybrid strategy of a “restricted application.”

This is where a spouse files for their own benefits, and then the other spouse files a “restricted application” at age 66 to get spousal benefits while delaying their own filing until 70 to maximize benefits.

Waiting those four years boosts the individual’s benefits by 32 percent. Meanwhile, there are still two checks coming into the household.

The optimum approach varies based on the couple’s ages, longevity and past income, but starting Social Security at age 62 can be a setback for some because benefits are 25 percent lower than those at the full retirement age of 66 (for those born between 1943 and 1954).

An estimated 13 million people may qualify, some generating as much as $67,000 in extra income, according to Laurence Kotlikoff, a Boston University economics professor who developed MaximizeMySocialSecurity, software that identifies a wide range of Social Security enhancing strategies.

But time is running out on this approach, because the government changed the rules a few years ago to limit the restricted applications to people currently over the age of 64 and nine months.

The strategy typically works best when the person who had the lowest income throughout their career files first to start taking their own Social Security, noted William Reichenstein, principal of Security Solutions and a finance professor at Baylor University.

When the other member of the couple files for spousal benefits, they get a check for half of the other’s benefit.

Financial planner Mike Giefer recently did the math for one of his clients in Minneapolis. A doctor and nurse couple, both 66, decided that when the nurse turned 66 this past April, she would retire so she could be with their grandchildren and spend time as a volunteer.

Giefer suggested she start taking benefits immediately because she had reached the full retirement age, which would give her $22,000 for a full year of benefits. The doctor would then file for Social Security benefits as the spouse of the nurse, which would amount to another $11,000.

If he applied for his own benefits at 66, he would have received about $35,000 for a full year. But if he waits four years, he will get $47,000 instead. Meanwhile the couple would receive more than $132,000 in that time period. If they both live to age 95, the strategy will give them $215,000 more than if they had both retired at age 66 and claimed Social Security.

“Nine out of 10 people are not aware they can do this,” said Giefer.

The restricted application strategy also applies to divorced couples, though rules apply.

If you are divorced, you can qualify to get benefits based on your ex-spouse’s work history as long as you were married at least 10 years, your ex is entitled to Social Security and you are at least 62 and unmarried.

You can get help directly from the Social Security Administration on when to claim benefits (here).

But Elaine Floyd, director of retirement and life planning for Horsesmouth, a service that trains financial planners on Social Security claiming strategies, said SSA staff might not be versed on all the intricacies of figuring out the best claiming strategies.

She also suggested that people applying for “restricted applications” do so online.

Individuals trying to calculate their best Social Security options can also find help with spousal benefits at Open Social Security ( and Financial Engines (here lanner/).

For a fee, people can find elaborate Social Security benefit-maximizing strategies through companies such as and

Editing by Beth Pinsker and G Crosse