It is important to obtain a professional analysis of your Social Security options, but sometimes even more important to follow the advice to the letter. There are so many nuances within the Social Security system that one misstep can derail your entire plan.
In January 2014, Fred and Elaine retained me analyze their claiming options. I illustrated seven strategies for their consideration.
Fast forward to April 2016: legislation passed in November 2015 would affect some of the illustrated strategies. I spoke with Fred by phone on April 14 and sent him a follow-up email, explaining that if they wanted to implement Strategies 6 or 7 he must file and suspend within the next two weeks. I also said that if he filed and suspended, Strategy 4 would no longer be available , because once a husband has filed for his own benefits he cannot claim spousal benefits. The other four options would not be affected.
Fast forward to July 2018, when Fred calls me out of the blue. He tells me that they had settled on Strategy 4, and that he just went into his local SSA office to file for spousal benefits on Elaine’s record. There he was told that he was not eligible for spousal benefits. I pulled up their report, asked him a few questions, and learned the following.
Strategy 4 called for them to execute four steps:
- Elaine begins benefits based on her earnings record in March 2018 at age 66
- Fred files a restricted application for spousal benefits only in March 2018 at age 68-1
- Fred switches to benefits based on his earnings record in February 2020 at age 70
- Elaine switches to survivor benefits in February 2040 at age 87-11
The couple had indeed decided on Strategy 4. Fred, an astute and accomplished attorney, had read news stories about the demise of file and suspend, and he completed his filing and suspending before the April 29, 2016 deadline. Here’s what he failed to take into account: (1) there was nothing in Strategy 4 that called for him to file and suspend; and (2) I had cautioned him orally and and in writing that filing and suspending would eliminate Strategy 4 as an option. The combination of Fred filing in April 2016 and Elaine claiming her benefits in March 2018 leaves them in a position where none of the three strategies (4, 6, or 7) is available, and neither of them would be able to claim spousal benefits.
Epilogue. Fortunately there is an alternative that revives the availability of Strategies 6 and 7. Since Elaine claimed her benefits in March 2018, there is still time for her to withdraw her application, repay all the benefits she has received, and start over. Once her request for withdrawal is approved, she will be able to file for spousal benefits, retroactive to March, 2018. That will put them back on track for Strategies 6 and 7, as well as a host of other options that lie in between.
Moral. If there is a gap between the Social Security advice you receive and what your own research reveals, it is usually more prudent to ask questions than to rely on your own findings.