2 restricted Social Security benefit scenarios and 1 file and suspend

Q: My wife and I scheduled an appointment at the Social Security Administration to apply for file and suspend and restricted application. My wife turned 62 last August and I turned 63 last November (2015). We were basically turned away from this process because we were told ONE of us has to be at FULL retirement age (66 for us) for the other to qualify for the programs at age 62. Is there anything the agent is not telling me, or is all of this a non-issue for us at our ages? — Larry Spradling, North Richland Hills, Texas

A: Well, you're not alone in having difficulties understanding not only the "regular" rules around Social Security benefits, but also the new rules that are just coming into effect, says Jim Blankenship, author of A Social Security Owner’s Manual.

“In your case, the sunset of the file-and-suspend tactic is occurring before you will be in a position to take advantage of it,” says Blankenship. “This rule is disappearing at the end of April. The folks who could take advantage of it must reach age 66 by May 1, 2016 — which clearly eliminates you and your wife from this option.”

Not 62? Deemed filing Social Security loophole has closed

The other option, that of a restricted application for spousal benefits, is still available to you but not until you or your wife have reached full retirement age (FRA), says Blankenship. “But only one of you will be eligible to take advantage of the restricted application,” he says, noting that this option is available to folks who will reach FRA by Jan. 1, 2020.

So here's how it could play out, according to Blankenship:

When you reach age 66 in November 2018, you could be eligible to file a restricted application for spousal benefits based on your wife's earnings record. In order to be eligible for this, your wife must have filed for her own benefit at or earlier than the date that you file the restricted application. So either she could file for her own benefit early (either before or when you reach FRA in November 2018), or she could file for her own benefit when she reaches FRA in August 2019. When she has filed for her benefit, you will be eligible to file a restricted application and continue delaying your own benefits to achieve the delay credits.

File and suspend Social Security loophole closing fast

The reverse could work as well, says Blankenship. “But again only one of you can file a restricted application,” he says. “If your wife is the one who will be filing the restricted application, then you must file for benefits at some point either before or at her reaching FRA in August 2019. Then she can continue delaying her own benefit to some later date to achieve the delay credits.”

Typically, Blankenship says, this works best to delay the higher wage earner's own Social Security benefit while collecting a smaller amount in the interim. “So the lower-wage-earning spouse would file for his or her own benefit at the appropriate time, while the higher-wage-earning spouse would file a restricted application,” he says.

In both of the situations described above, it’s important that the spouse who is filing the restricted application must not have filed for his or her own benefits previously, says Blankenship. “In other words, the restricted application must be the first application that has been filed by that individual,” he says.

Q: My wife and I are both working now and we both are 62½ years old. I know there are changes to the file-and-suspend Social Security rules. My wife earns less than me. Is there any benefit for my wife to file for Social Security on her earnings record now at 62½ and for me to start my spousal benefit at 66 and postpone my Social Security until 70? Also, if we pursue this tactic what happens if we keep working? — D.K. Chatterjee, Washington, D.C.

A: First of all, you don’t have to worry about the deadline on April 29, says Matthew Allen, the co-founder of Social Security Advisors. “Basically, you’re not old enough to take advantage of file-and-suspend which is what is expiring on April 29,” he says.

However, if you and your wife are indeed 62½, Allen says you’ll both qualify for the restricted application tactic; an individual had to be at least 62 no later than Jan.  2, 2016, to qualify for this.

As for your question about the earnings test, the Social Security Administration (SSA) withholds $1 in benefits for every $2 of earnings in excess of the lower exempt amount. For 2016, the lower exempt amount was $15,720. SSA also withholds $1 in benefits for every $3 of earnings in excess of the higher exempt amount, which is 41,880 for 2016. Earnings in or after the month you reach normal retirement age, or what is also called full retirement, do not count toward the retirement test. Here’s the link to the Retirement Earnings Test Calculator.

And speaking of calculators, Allen recommends that use one of the online calculators to crunch your numbers and/or speak with Social Security representative at 800-772-1213 (TTY 1-800-325-0778) to determine what is best for your specific situation. “Social Security is basically one giant math problem and is specific to each couple,” says Allen.

Q: My husband will be 68 in November. He took Social Security early at age 63. I will be 65 in October. I planned on filing a restricted application on my husband's record when I turn 66 (full retirement age) in 2017 and in 2021,  when I turn 70, I would file on my earnings record. Can I still do that or, does my husband have to suspend by April 29, 2016,  so I can file on his record in 2017? —  Maureen Dwyer, Cincinnati

A: If your husband wants to continue to receive his retirement benefit, then he doesn't have to do anything, says Mike Piper, author of Social Security Made Simple. “He just continues to receive it, and you would file a restricted application at your FRA, and then file for your retirement benefit at age 70 — exactly as you had originally planned,” he says.

The only reason your husband would have to suspend by April 29, 2016, is if he wants to suspend in the first place, that is he wants to temporarily "turn off" his retirement benefit to receive delayed retirement credits, says Piper. “If he does want to do that, then yes, he should do it by April 29, 2016, at the latest, otherwise she will not be able to receive spousal benefits on his work record until he unsuspends at his age 70,” he says.

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Emailrpowell@allthingsretirement.com.