Under the maximization strategy known as Restricted Application, you could file for Social Security benefits at or after full retirement age (FRA), but elect to take only your eligible spousal benefits, allowing your individual benefits to grow until they max out at age 70. At that point, with a raise of up to 32 percent under your belt, you would switch to taking your individual benefits.Put more simply, restricted application would in the past take place when someone who is full retirement age (that's 66 or 67 depending on when you were born) applies for spousal benefits only and delays his or her own benefits allowing them to grow at 8 percent a year, explains Jim Blankenship, a financial planner in New Berlin Illinois and author of "A Social Security Owner's Manual."
Restricted Application is being phased out immediately for anyone born after 1953.
Via Jean Chatzkyu, here is an example of how it used to work:
Ben and Mary, for example, are both full retirement age of 66. She's eligible for a $700 monthly payment, Ben is eligible for $1,500. Ben can apply for a restricted application and receive $350 a month in spousal benefits immediately while waiting until 70 to apply when he applies for his own benefit. Together they'll receive $1,050 in monthly income while they wait for Ben's higher payout, which will total $1,980 when he reaches 70...
Restricted application works well if the younger spouse is not the higher earner and wants to file for benefits early. A wife age 62, for example, may file early for her own benefits. Her husband, who is 66, applies for restricted application for spousal benefits on his wife's account leaving his own benefits to grow. When the husband reaches age 70 he converts to his benefits, which have now grown 32 percent. The wife, who is now full retirement age, can now apply for spousal benefits on her husband's account if they are higher than her own.Social Security has turned cash flow negative. The money just isn't coming in fast enough to keep this Ponzi scheme going. The gap between flow into the Social Security "fund" and outflow is going to continue to expand.
Now, the government is only monkeying around the edges of benefits, but at some point the cuts are going to get much more severe and will affect all those counting on Social Security retirement money.