Maximizing Your Social Security Benefits

By on February 4, 2014 in Current Events, Retirement with 34 Comments

Note: Changes brought about the by the Bipartisan Budget Act of 2015 have rendered some or all of the information in this article obsolete. 

Would you like to get a 32% higher Social Security benefit?  How about being able to collect ½ of your spouse’s Social Security benefit while you are still working; with no earnings test?  There’s a catch, right?  Yes, there is; you must be at least your full retirement age (which is 66 or 67 for most readers of this article). 

What we will discuss in this article is a technique called “restricting your benefits.”  This technique will work for all FERS employees and many CSRS employees.  If you have not already applied for your Social Security benefits, once you have reached your full retirement age you are allowed to restrict your application to spousal benefits only.  Those who apply for Social Security prior to their full retirement age do not have this option; they are automatically given whichever is higher, their earned benefit or their spousal benefit (which is no more than 50% of what their spouse is receiving, or entitled to receive).

By this point, many readers will tune out.

  • If you are going to retire at an age younger than your full retirement age and will need the money from Social Security to live on, this option is not for you.
  • If you are a retired CSRS employee who is already collecting your CSRS pension, the Government Pension Offset will ensure that you are not able to collect anything off of your spouse’s earnings. 

Social Security has a “spousal benefit” that a spouse is entitled to even if he or she has never worked.  When Social Security came into being back in the 1930s, the typical American family had a wage earning male and a stay-at-home female.  As Social Security was based on payroll taxes, that meant that the stay-at-home spouse was, in many cases, not eligible for Social Security in their own right.  Spousal and survivor benefits were created to allow the spouse that did not work outside the home to be entitled to some type of benefit.  Congress recognized that there was a gender disparity by originally limiting some benefits to women only (for example, “widow’s benefits,” called “survivor benefits” today, were once available only to women).

In addition, please note that the definition of spouse for all federal benefits now covers legally married same sex couples.

The Social Security earnings test can come into play for some folks too.  Up until individuals reach full retirement age, their Social Security benefit is reduced if they earn above a certain amount.  For 2014, the reductions are as follows:

  • Between retirement and the beginning of the year in which an individual reaches full retirement age, any Social Security benefit received is reduced by $1 for every $2 earned above the amount of $15,480.
  • In the year in which an individual reaches full retirement age, any Social Security benefit received is reduced by $1 for every $3 earned above $41,400.
  • Beginning the first day of the month in which an individual reaches full retirement age, there is no earnings test at all.
  • If an individual delays applying for Social Security benefits until after full retirement age, he or she receives “delayed retirement credits” of 8% per year up until age 70. (See: When Should You Apply for Social Security?)

Now that we have the necessary background, let’s look at the strategy of restricting your application to spousal benefits only.  In order to apply for spousal benefits, your spouse has to have already applied for Social Security.  This does not mean that they have to be collecting it; a future article will deal with the strategy called “file and suspend.”

Let’s say that you are age 66 (the full retirement age for anyone born between 1943 and 1954) and would be entitled to $2,000 a month on your own account and your spouse is receiving a Social Security benefit of $1,500 a month.  If you apply for a spousal benefit, you will receive $750 per month.  Over the 48 months between age 66 and age 70 you would receive $36,000 in spousal benefits (actually, what you received over that period would increase due to cost of living increases).  When you reach 70 and apply for your own benefits, your monthly amount (exclusive of cost of living increases) would have increased to $2,640 per month.  This strategy does not affect the amount of Social Security to which your spouse is entitled.

In order to restrict your application to spousal benefits only, you have to have attained your full retirement age.  Therefore, you would not be subject to any earnings test on benefits received.

So who would benefit from the strategy of restricting their application to spousal benefits?

It would be a person who could afford to wait until their full retirement age to collect any Social Security benefit at all and could afford to wait until 70 to collect their own Social Security benefit.  This generally means either a well-off retiree or someone who, for whatever reason, continues to work up to or past their full retirement age.  A 2009 study noted that the majority of those who restrict their applications are higher income retirees.

It would more likely be a FERS individual than a CSRS individual.  If a CSRS individual is already collecting their CSRS pension, the Government Pension Offset would most likely eliminate any spousal Social Security to which they were entitled.

John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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  1. DeathWatch says:

    Why hasn’t social security been updated since the 1930s–paying those choose to stay at home wives (now spouses). Why should others pay for it. I am aware of childless couples with stay at home spouses who will most likely recieve more in social security than I will after working and paying social security benefits for 35 years. How is this fair–paying for the retirement of someone elses housekeeper? Also, with the affordable care act, those now discentivized to work will further deplete both health insurance raising the cost for the rest who do work and further deplete social security without paying for it.

    • Bill T says:

      And my wife, because she worked as a(n underpaid) teacher won’t beable to collect mine, and her benefit that she earned herself is severely reduced.

      • DeathWatch says:

        I chose not to teach (with an education degree) because of the pay. Teachers can earn nearly as much as I do and have summer off.

  2. Bill Swift says:

    One item to consider is the other sources of income available to a surviving spouse. I was a Federal employee and my wife was not. We both have about the same amount in 401s – mine in TSP and hers in a private plan. I currently get a FERS pension and Social Security. My wife is still working.
    Post-employment, my wife will have money from her 401 (k). Nothing else until she takes Social Security. If I pre-decease her (odds are good there as we are the same age and women generally live 7 years longer) she will lose half my FERS income and ALL of my Social Security. The only way to increase her income in retirement is to delay Social Security until age 70. She can start to take half my Social Security at age 66 without affecting the amount of her benefit at age 70.
    Our risk is that she will deplete her 401(k) at a greater rate by delaying taking her Social Security. I think we are willing to take that risk. Both her parents reached their 90s – her father died at age 95 and her mother is still going strong at age 92.IMHO she is going to need her maximum Social Security in her 70s and 80s.
    I don’t see a big risk or downside here.

  3. Name says:

    In this scenario, I think only one member of the married couple can delay receiving the benefits on their own record until age 70. One member of the couple (Spouse A) actually has to be receiving benefits at age 66, then the other person (Spouse B) can receive half of A’s amount until the age of 70 when B will qualify for a larger amount on B’s own record. (And B’s amount will have grown 32% above what they would have gotten at 66.) It is my understanding that A & B cannot both receive the larger amount at age 70, if one of them claims spouse’s benefits at age 66. See: http://www.socialsecurity.gov/
    ” Note: If both you and your current spouse are full retirement age, only one of you can choose to receive spouse’s benefits now and delay receiving your own retirement benefits until a later date.”
    BUT this does not hold true if you are divorced. You can claim on your ex-spouse’s record at age 66, whether or not he/she has claimed benefits, and receive half that amount, while allowing your own benefit to grow til age 70. What you do will not affect whatever the ex-spouse decides to do – they might also have decided to delay receiving benefits til age 70. I suppose they could also have filed to receive half of your benefit at age 66 and let their benefit grow til age 70. (Advantage to being divorced?)

  4. a veteran and retired mail man says:

    Would love to see the wep/gpo rip off repealed. I worked 20 years under soc.sec. prior to being hired by the postal service and csrs. There are thousands of us across the nation affected by this theft from our annuities. As usual our esteemed representatives who voted this in excused themselves and receive full benefits. Fair is fair and this is anything but fair.

    • Byrne says:

      You aren’t alone. I too worked 20 years under social security and have also taken the Ronnie Reagan WEP theft. CSRS participants also take a percentage hit during their first 10 years of employment.

  5. OldRet says:

    As a CSRS retiree is there really a reason to wait. I may be wrong but in retirement seminars we were tiold that due to WEP we could use 46% as a general rule of thumb for how much of our Social Security we would get. Assuming I was to get about $700/mo at age 62 that would mean I would now get $350/mo (round off to 50% for easy calculations). If my Social Security grows at 8%/yr then that figure would rise to $756/mo in one year but due to WEP the net result would only be an increase to $378/mo after one year if I chose to collect. If I took the Social Security at $350/mo the previous year I would in all likely hood get a COLA of about 2% so my $350/mo would have risen to $357/mo. So in effect I would begetting a 6% increase/yr (not 8%). That’s a pretty nice safe return. Now, if I took that $350/mo benefit the previous year an invested it in the stock market at an average return of 10% I could conceivably make almost twice as much money with some additional risk. It is not money I need to live on. I chickened out and left it in at 62 (just a few months ago) but am considering taking the money next year and investing it for greater return in spite of the current downturn.

    • retired worker fed says:

      I am no expert on social security. I assume that you did not work for 20 years under social security. I believe that your first tier is reduced from 90% to 40% of the first $8000 or $9000 per year. The second and third tiers of 32% and 15% remain the same. I guess that translates into a 46% loss for those who were not part of social security for 20 years. If you were part of social security for more than 20 years add 5% for each year up to 90% at 30 years.

  6. jhenjoh says:

    Because of WEP for CSRS it did not make sense to wait. Until I retire I am collecting my full SS benefit (For 3+ years of payments). Upon retirement it will drop to about 45% of the current benefit amount. It would have never been made up by any increase due to waiting.

  7. Jack says:

    Not “wanting” to retire is the keyword…not wealthy enough to not have to. My office is filled with Federal Workers between aged 60 and 70 who just don’t want to move on. I’m 29 and can’t get a promotion to GS-13 until one of the dinosaurs goes. Obviously when they do this article will apply to them. I wonder if there where still be SS left when I’m that age. If there is I’m sure the youngest to collect even the minimum amount will be 67 or higher.

    • little taxpayer says:

      Wow, Jack, I have absolutely no sympathy for you. In my agency, the typical employee works their way up from a GS-3. Most are in their late 30s to early 40s befored earning a coveted GS-11 position, although there are some golden children who are bumped up to that level in their 20s. They tend to make really expensive mistakes. So good for you! You picked the right career in the right place with people who apparently tolerate jerks.

      • Jack says:

        Please see my above comments. Thanks 🙂

      • PublicServant1987 says:

        I’m sorry but I agree with Jack (with the exception of referring to older employees as dinosaurs although I can feel his frustration). I’m 26 and already am a GS-13. There are a lot of us in my age group. This is how it is in DC although I’m no expert on the rest of the country. I’m actually thinking about resigning and taking a contract position which would greatly increase my bottom line. Jack – It sounds like your problem is working for DoD. I use to be on Active Duty as well and can tell you most of the civilian positions in the Pentagon go to military retirees. I’m sure you’ll eventually get your 13 but you will never go any higher unless you are a retired Colonel or higher. There is also the fact that there is not a lot of upward mobility for you because most of the positions that would be 13s or 14s in other agency are taken up by Active Duty personnel. I recommend you apply for jobs at other agencies like DHS (That’s what I did). There are a lot more positions with more upward mobility there. Just be ready for a culture shock when you are out of the military environment.

    • steve5656546346 says:

      Jack, in answer to your question, there will NOT be Social Security left for you when you retire: the system will be bankrupt. It is a pay as you go system, and the mammoth baby boom generation did not have enough kids to support the system for themselves…and so they will bankrupt it…

      • retired worker fed says:

        You have no basis for making your assertion. There are ways to correct the problems. Maybe they will be implemented and maybe they will not. We will see.

      • OldRet says:

        But…if Social Security can make it another 20 years then there are many less people to pay benefits for the current generation..

      • OldRet says:

        With some minor adjustments Social Security could be made solvent well into the next century. Many ideas abound. Worst case scenario is that through 2037 you will still collect 100% of your earned benefit. After that, with no changes, you can still expect to get 76% of your earned benefit until 2083 at which time, again with no changes, you can expect to receive 73% of your earned benefits. As you can see there WILL be Social Security left when you retire and with some smart planning full Social Security benefits could be retained into the next century. Information gleaned from SSA.gov.

    • FoundingFathersGhost says:

      “I’m 29 and can’t get a promotion to GS-13 … ” I barely know where to begin. No one is entitled to a promotion, despite what “Jack” infers. Maybe a GS-11 or 12 from someone else will apply for one of those GS-13 positions and get them. Maybe the work unit will downsize when dinosaurs leave. If Jack is as good as he seems to think he is, there are plenty of other agencies and places to work, why not apply there now and be a GS-13 in no time? Maybe Jack is just bragging as 29 year olds who are promoted too rapidly tend to have big heads. Good luck getting that GS-13. Let me know if you need a reference.

      • Jack says:

        Ok everyone seems to have misunderstood. First off to the individual who talked about being a GS-3. I joined the army when I was 17 and came in as an E1 which is the equivalent of a GS-1. After seven years on active duty and several tours in Iraq I was hired working in a Pentagon Agency as a GS-12 (I use to be a Staff Sergeant). So everyone knows, the cost of living in the DC Metro area is MUCH higher than it is elsewhere in the country. I know that in rural areas many of the positions are undergraded. Every single civilian in my office is either a GS-12, GS13, GS14, or GS15. Only 15s and some 14s hold supervisory roles. the rest of us a merely action officers. The lowest graded person I’ve actually met in my agency is an 11 and she was a secretary/admin assistant, so right there I’m at the bottom of the barrel. That being said, I still made significantly more money as an E6 due to the fact that they paid for my housing and I had no healthcare insurance costs. Don’t even get me started on the pay of the commissioned officers that have equivalent responsibilities to me as a GS-12. Whats crap is that I’ve worked with numerous military members who’ve come onto my team, done a good job, and have gotten promoted. Once you reach a certain time in grade and meet certain training requirements, and good evals, you are generally promoted. That is how it works. As one of the few civilians in the office, that is not the case. No matter how good my evals are, or how high my education is, I cannot get promoted unless a position opens up and than someone has to actually hire me for it. Part of this revolves around the right person retiring or dieing, and then again I still have to be hired. In the military there is a policy of move up or get out. Noone would be at the rank equivalent to a GS-12 for more than six years. My feeling is that there needs to be a similar system with government civilians. People get promoted up to a position that they are incompetent at and then hold that position until they are in some cases 70 years old. Many of these individuals have been “road retired” for upwards of a decade, and can’t even get a step increase as they are a GS-13 step 10. I’m not saying that there aren’t quality people in that age group, because I’ve worked with a few of them. I’m just speaking based off of experience. I seems to me like some of these comments would fall under “age discrimination” although this only applies to individuals 40 and over for some reason. What is funny though, is that generally discrimination applies to “minorities”. As a government civilian in his 20s I would say that I am the minority (almost all of the other civilians in my office are at least 50 if not much older). Many of you have implied that I am not qualified for a job of certain responsibility based on my age alone without knowing anything about me. That is the problem in the government as I’ve seen. Jobs tend to go to those who have been there the longest versus who is actually the most qualified or would do the best job.

        • Old Timer says:

          That explains some of it. You former military brats are all the same. You think you had it tough because you were in Iraq for two years? Try Vietnam. You said you joined when you were 17? That means the army probably paid for your housing, utilities, food, and all other medical needs for the next seven years. I’m sorry kiddo but it sounds like that warped your impression of reality. It sounds like you got a government job at a much higher grade carrying more responsibility but your net income probably went down by a lot because you now had to pay for things like rent, groceries, and health insurance? Am I right? You have no appreciation of a GS-11 or GS-12 job and want to make something more competitive to your military salary – well I have news for you. That is NOT going to happen. In the real world people pay for this stuff themselves. If you don’t like it then go back on Active Duty. Why did you get out anywhere? Too much for you to take? You said you got out as an E6? That is equal to an GS-5 through GS-7 not a 12. You probably thought you were getting a huge pay increase and were shocked to see your first civilian LES huh? Serves you right. I’m sure you got hired on some phony veterans preference thing over more deserving employees of more deserving years like myself and all the “dinosaurs” that you are complaining about. Positions aren’t “undergraded” in rural areas. They are over graded in DC. GS-12s that I’ve seen are managers with 7-10 employees under them. If you were anywhere else you wouldn’t even qualify to get an interview.

          • Jack says:

            Ok so were you actually in Vietnam or did you just watch a few war movies with Mel Gipson in them? I say this because you obviously don’t like the military. A military brat is the child of a military member, not a military member themself. I got out because I didn’t like my status as an enlisted service member. At the time I didn’t have a degree and wasn’t a candidate to be commissioned. Becoming a civilian employee gave me the chance to work at a job that I could actually use my brain to its maximum potential. I’m in my process of trying to become a Warrant Officer (White Collar Technical Professional) in the National Guard. If it works out and I become fully qualified I’m considering going back on Active Duty. From your comment about veterans preference you obviously know nothing about it and are not a veteran. It will not get you a job. All it will do is bump you to the top of the list to be interviewed for lower graded positions. You will still be interviewed against 20 other people with veterans preference and some without. The hiring authority does not have to look at veterans preference at all – it only helps get you the interview. Generally, GS12 and above positions are open only to current federal employees and do not look at veterans preference. As I was in the Army I was a current federal employee. I’ve said enough.

        • OldRet says:

          I joined the civil service in 1978 after 8 years in the Army. I left the Army as a Staff Sergeant E6 senior site weather forecaster (was up for E-7). After I left the Army I applied for a Civil Service job. I was offered a trainee position as a GS-3 accounting clerk. After a year at the GS-3 level, I spent time in a GS-3-4-5 training program. Several years after that I made GS-6 head clerk and then finally team lead at the GS-7 level several years later. By the late 80’s I finally made it to the GS-9 analyst level but I had to do it via a GS-7-9 training program. Once computers came along in the early 90’s I volunteered to become a part of the IT team at the GS-9 level. In the early days we installed and maintained file servers, installed and maintained all computers and hardware, created windows programs with Visual Basic and other developer tools and much more. It took me almost 20 years just to make it to GS-11 as an IT programmer before my career took off. I can see where grade creep has taken over. Jack…count your blessings!.

          • Jack says:

            I completely understand what you are saying believe me. That being said where was it that you were a GS-11 at? Things are VERY expensive in northern VA where I live. My two bedroom apartment (700 square feet) that I share with my wife and child is over $2,000 a month. Private Sector employees who work here make 2-3 times as much as they would make in rural areas. As federal employees, our locality pay is very insignificant, and my pay as a GS-12 in Arlington VA isn’t much higher than a GS-12 in rural Pennsylvania where my same apartment would be $500 a month. In order to find quality people, most of the positions are one or two grades higher than they would be in more rural areas. Someone on GS-9 or below pay would have difficulties paying their bills without multiple roommates. I use to work in the IT field as well, and I can tell you from the description of your GS-11 job that you would be a GS-13 here. Either that or you would be a contractor making 120-150K (more likely). That is another reason for the (grade creep) as you put it, is to compete with the outrageous salaries that some of these contractors are being payed. About 5 years ago DoD did a massive contractor to DoD civilian conversion. The job I have was originally meant to go to the contractor that I worked on a team with. He chose not to apply for it as he didn’t want to take a 40k a year pay cut to GS-12. I was working on the team as military and applied for it as well for giggles. I was shocked when I was actually hired as I was only enlisted and most of the 12s and 13s had the responsibility of an O3 or O4 in a staff environment. You tell me that I’m blessed but the fact is that I made more as an E6 than I do as a GS-12 which is supposedly equal to a Major (O4). The reason for this was my BAH (Housing allowance). Unlike the locality pay for civilians, BAH for military personnel is actually designed to pay for housing in the area you live in. For an E6 with dependents in Arlington it is about a taxfree $2,600 a month. When you also factor in the free healthcare and other benefits I made about $600 more a month. Now lets talk about the grade that actually has the same responsibility as me – a senior Captain or junior Major. The base pay is more than mine due to the pay freeze we’ve had for the past three years (They’ve gotten 1.7% a year). On top of this they get a monthly tax free housing allowance of almost $3,000 netting them more than what a GS-15 would make. I told you that I am one of the few civilians in my office. It is hard not to be bitter when everyone else I work with lives in a nice townhouse, drives a nice car, and can go out to eat everyday. These people that I consider my peers bring in a tax free $3,400 more than me a month. Getting promoted to GS-13 will not nearly bring my paycheck close to theirs, but it is something at least. As I am in the National Guard I have just as high a chance of being deployed again as they do. The only real benefit is that my job doesn’t depend on me being able to pass an APFT every six months and that I don’t have to shave every day.

          • OldRet says:

            Grade is not supposed to have anything to do with it but I know DC is expensive. NMCI pretty much took our jobs away. You get paid a locality pay to cover the costs of higher local cost of living but it’s probably not enough. Just for info, I worked for NAVSUP in south central PA which they are now considering for the DC locality rate.

          • Jack says:

            I know its not supposed to but the fact it that the locality pay doesn’t cover it. The locality pay in DC is the same as the locality pay in Baltimore Maryland which has a significantly cheaper cost of living. And still the locality pay isn’t that much higher than the rest of the United States. BAH for military is supposed to pay for decent housing in the zipcode you work in. The rates very greatly zipcode to zipcode. Locality rates on the other hand are not based on the cost of living as civilians are expected to pay for their living themselves.. Instead its based on the percentage difference between the government and private workers would make in this zipcode, although for Arlington it doesn’t meet the standard (It would have to be like 50%). As you stated with NMCI, I’ve never actually seen a government employee here doing any real IT work… especially not software development. All off it was done by contractors. The government employees just do project or program management – same with the military. I believe its why government employees are losing their technical skills – we are depending too much on contractors, and why there have been issues like the Obamacare website.

          • Byrne says:

            Have you considered returning to active duty?

      • Byrne says:

        If Jack is that good he may earn much more as a contractor. I doubt the dinosaurs will miss his contributions.

    • retired worker fed says:

      Aw. What a shame. At 29 you cannot get a 13. What do you do? is a 13 the highest level of non management grade? How long have you been there? What is your knowledge vs the dinosaur people? I knew a 12, which was my grade level, who was clueless about a basic issue. I knew a 13 that I could run circles around from a technical standpoint. Be patient and learn your job first.

      • Jack says:

        In my agency 13s are generally non-supervisory, but there are also a few 14s that are non-supervisory as well. We are very top heavy, but again I’m in the DC Metro area where the cost of living is VERY high. Most contractors doing that same work as me who are five years younger are bringing in 120-150K a year. A 13 won’t bring me anywhere near to that level. I’m a Management Analyst. I deal mostly with data mining and analysis, but there are a lot of other aspects to it as well. Out of 107 people in my office there are only 8 civilians who are government. Of all of them I am one of two 12s – everyone else is a 13 or higher. Most of them are retired military officers who got the job because they knew someone rather than due to any natural skill or ability, and seek to do little more than work an eight hour day and make up for the other 50% of their base pay from when they were on Active Duty. I’ve been doing this job for four years as a civilian but two years before that as military. I honestly do a lot more work than most of the civilians of higher grades. My impression is that my boss expects a lot more out of me knowing that I am new, younger, more ambitious, and have 30 years left ahead of me. He doesn’t expect much of the other civilians as they are at the end of their careers and do not intend do move any higher. I did not make any comments about older people lacking technical skills as I know this is an unfair stereotype and not the case in many situations. The issue I have are the road retired employees who take no initiative to change or improve anything or do anything but maintain the status quo. They aren’t tasked with any major projects and only do simple day to day work to maintain the status quo. My boss has verbally told me that he doesn’t expect a lot out of the two 13s I work with as they have clearly both reached their maximum capacity and the end of their careers. However, he stated he respects them greatly as one is a retired Lieutenant Colonel and the other is a retired Sergeant Major, both in the mid 60s, and that at this point in their lives they deserve a simple eight hour day with little grief or aggravation. He stated that when he is at that point in his career he will want the same thing and so will I. Do you see the problem now? A job should not be an entitlement to reward decades of faithful service.

  8. Mentallect says:

    That is some good information. I hope there are a few nickels left in Social Security when I am eligible to collect, but I am not holding my breath, nor planning on SS as a retirement vehicle.

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