Few programs get as much support from Americans than Social Security, and that's because most people end up taking advantage of its benefits eventually. By being smart about how the program works, you can do lots of things to ensure that you get every penny of Social Security money you're entitled to receive.
One of the hardest things to understand about Social Security is how various types of benefits work together with each other, and a host of strategies for claiming Social Security have hinged on using little-known provisions to maximize the total amount you and your family can receive from the program. Yet some of those strategies got so lucrative that lawmakers took them away. One strategy known as filing as a spouse first is still available for a select few -- but once the ball drops in 2020, those who haven't yet reached full retirement age will find themselves out of luck.
Continue Reading Below
The basics of FAASF
The file as a spouse first strategy -- sometimes called FAASF for short -- involves those spouses who've reached full retirement age and are entitled both to retirement benefits on their own work record and spousal benefits based on their spouse's work history. Under old Social Security law, spouses had a right once they hit full retirement age to restrict their applications only to spousal benefits, allowing their own retirement benefit to earn delayed retirement credits and therefore continue to grow. At a later date, spouses could claim their own retirement benefit, which would then give them higher monthly payments.
Here's how it worked. Say that you and your spouse both worked but that you had a lower-paying job. As a result, your full retirement benefits would be $1,200 per month, while your spouse would receive $2,400 in monthly benefits. Because spousal benefits taken at full retirement age amount to half what the worker receives, you would be entitled to a spousal benefit of half of $2,400, or $1,200. If you claim both benefits at the same time, then you don't get the total but rather get the larger of the two. In this case, they're equal, so you'd get $1,200 as a monthly payment from Social Security.
However, if you qualify to file as a spouse first, then you can choose only to receive the spousal benefit. You'd still get $1,200, but your own retirement benefit would grow at a rate of 8% per year. Full retirement age is 66 for those who are set to turn 66 this year, and so if you waited until age 70 to claim your retirement benefits, you'd be entitled to get $384 in delayed retirement credits, making your subsequent monthly payments $1,584 rather than $1,200. That adds up to more than $4,600 extra per year starting at age 70 and continuing for the rest of your life.
All good things must come to an end
Unfortunately, the fact that FAASF produced extra benefits attracted criticism from lawmakers. As part of a budget negotiation back in 2015, the White House and lawmakers worked together to eliminate provisions like FAASF from the Social Security laws. Calling the provisions "loopholes," legislators argued that the boost that spouses got in their benefits from using the strategy wasn't fair.
However, Congress didn't simply get rid of FAASF in one fell swoop. Instead, it gave those who might have been planning to use the provision a chance to do so. Specifically, the legislation allowed those who reached the early retirement age of 62 before the beginning of 2016 to keep filing as a spouse first without being forced to file for retirement benefits at exactly the same time.
2019 will be the last year that anyone will reach full retirement age early enough to use FAASF under the grandfathering provisions. If you're 65 and turning 66 later this year, then you'll first become eligible on your birthday. Although technically the provision will remain available beyond reaching full retirement age and even into future years, there's no incentive to wait any longer to claim spousal benefits, because they aren't subject to increases from delayed retirement credits.
Use it or lose it
So if you'll hit 66 this year and have the chance to claim both retirement and spousal benefits, don't forget about the FAASF strategy. Depending on your and your spouse's earnings, it won't always produce bigger payments, but it's worth looking at to see if you're one of many who could get extra money as a result.
The $16,728 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.