Social Security provides retirees and their families with billions of dollars in benefits, and the program has many features that you can use to increase the amount of benefits you receive. In late 2015, lawmakers took steps to eliminate some popular Social Security strategies that some participants used to boost their benefits, including the strategy known as "file as a spouse first," or FAASF. The FAASF strategy is being phased out, but there are still millions of Americans who are eligible to take advantage of the provision and potentially get larger monthly checks from Social Security as a result. Below, we'll look more closely at FAASF and help you determine if you qualify to use it.
What's the FAASF strategy?
The gist of the file-as-a-spouse-first strategy is in its name. In most cases, people file for retirement benefits and spousal benefits at the same time, and they receive whichever amount is larger. Specifically, if the benefit you're entitled to receive based on your spouse's work history is larger than what you'd receive in retirement benefits based on your own work history, then Social Security pays you your retirement benefit plus enough in spousal benefits to bring you up to the higher amount. In fact, anyone younger than full retirement age who claims benefits is deemed to have claimed claim both retirement and spousal benefits at the same time, regardless of whether they actually wanted to claim both or not.
However, under previous law, those spouses who had reached full retirement age had the option of filing a restricted application for Social Security benefits that only involved their spousal benefits. This allowed them to get a monthly payment from Social Security based on their spouse's work history while deferring their own retirement benefit. This allowed them to accumulated delayed-retirement credits on their retirement benefit, eventually leading to a higher payout.
An example can show how this might work. Say a worker named Sam has earned a retirement benefit of $1,000 per month but could receive $1,100 in spousal benefits based on Sam's spouse's work history. If Sam files for both regular and spousal benefits at the same time, then Sam will get $1,100 per month, with future adjustments for inflation for the remainder of Sam's life.
If Sam files as a spouse first, then the Social Security Administration will still pay the monthly spousal benefit of $1,100. However, Sam will also earn delayed-retirement credits on the regular retirement benefit. Sam can switch to the retirement benefit at age 70, by which time the initial $1,000 amount will have grown to $1,320. In effect, the FAASF strategy will give Sam an extra $220 per month for life starting at age 70.
What happened to FAASF?
A little over a year ago, lawmakers passed laws that closed what they saw as Social Security loopholes. One of the casualties of that law was the file-as-a-spouse-first strategy. For most people going forward, the FAASF strategy won't be available.
However, the law included a clause that will still allow some people to use FAASF in the future. Specifically, if you turned 62 by Jan. 1, 2016, then you'll still be able to use the FAASF strategy when you reach full retirement age. That gives those who are in or near retirement the opportunity to take advantage of the strategy once they reach full retirement age -- which in some cases will be as late as 2020.
Don't miss out on higher Social Security benefits
Getting the most out of Social Security can make your retirement years more financially secure. If you still qualify to use the file-as-a-spouse-first strategy, doing so could earn you thousands of dollars in extra benefits that you otherwise might have missed out on entirely.