Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Social Security Confusion

ARCHIVES
Flickr user Rusty Clark

Last week, we looked at the importance of using the magic words when asking questions about your retirement benefits. This week, let’s look at a specific example of how this principle came into effect for a federal employee trying to navigate the changes in the Social Security law passed late last year. Those changes phased out the “restricted application” and the “file and suspend” options for claiming Social Security retirement benefits.

One employee recently sent me the following email on the subject:

Although it is water under the bridge now, I wanted to tell you that the Social Security Administration is now interpreting the law differently even though the website hasn’t changed. The SSA is now saying that I had to have applied for spousal benefits before April 30. I got this same answer in person at the SSA office and over the phone. I think this is pretty outrageous, but I wanted to let you know.

The SSA representatives thought this employee was talking about the file and suspend strategy, which had to be completed by April 30. According to SSA, “if you submit a request to suspend your benefits to earn delayed retirement credits on or after April 30, 2016, you will not be able to receive auxiliary benefits on someone else’s Social Security record.”

But the employee wasn’t looking to file and suspend. She actually wanted to file a restricted application based on her husband’s work record. She just didn’t know exactly what this was called and therefore didn’t use the precise terminology in asking her question.

The restricted application option ended for those who turn 62 on or after Jan. 2, 2016. But for those who turned 62 before that date, the option remains available at the full retirement age. One way of explaining this is the concept of “deemed filing,” meaning that when you file for either your retirement or your spouse’s benefit, you are required or “deemed” to file for the other benefit as well. Deemed filing rules already apply when you file for either your retirement or your spouse’s benefit before you have reached full retirement age. The new law extends deemed filing rules to apply at full retirement age and beyond, except for those who turn 62 before Jan. 2, 2016.

The employee who emailed me turned 62 before 2016, so she should have been able to file a restricted application (deemed filing rules did not apply to her). She will reach her full retirement age in October of this year. So why was she told she couldn’t do this? Because she didn’t know how to ask the question. After I gave her the magic words, she went back to Social Security and requested to file a restricted application. Here was the result:

Just an update in my adventures in trying to apply for spousal benefits without being deemed to have filed for my own. The person I spoke with confirmed that, yes, I could apply and yes, I could defer my own benefits and still get the spousal benefit and yes, I could still be working and get benefits. She said I had to apply at my local office.

To get the answer you want about your retirement benefits, first make sure you’re asking the right question.

Photo: Flickr user Rusty Clark

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at www.retirefederal.com and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement and the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec