This article was updated on February 1, 2016.
For millions of Americans, Social Security is an essential source of income throughout their retirement years. To make Social Security stretch as far as it can, you need to know about innovative strategies that can help you make the most of the benefits you're entitled to. One of those strategies involves filing as a spouse first, also known as FAASF. While that acronym doesn't exactly roll off the tongue, the FAASF strategy can provide extra money that many retired couples don't realize they can receive. However, a recent legal change made the FAASF strategy available to only a select group of those at or approaching retirement age.
2 ways to get paid
Married Social Security recipients have two ways they can receive benefits. They can get payments based on their own work histories, filing for benefits as early as age 62 or as late as age 70. The amount you receive depends on your career earnings as well as how early or late you start taking payments. Those who were born between 1943 and 1954 have a full retirement age of 66, and those who are in that group and take Social Security early can see their benefits cut by as much as 25% compared to their full-retirement benefit, while those who wait can boost their base benefit by as much as 32%.
But married Social Security recipients also have the option of receiving benefits based on their spouse's work history. The FAASF strategy takes advantage of that option by allowing the higher-earning spouse to receive at least a modest spousal benefit while allowing his or her own to grow as large as possible.
How FAASF works
Here's how the strategy commonly works. The lower-earning spouse files to receive Social Security benefits based on his or her own earnings history. That brings in some Social Security income to help the couple meet their financial needs, but it also allows the higher-earning spouse's eventual monthly benefit to continue to grow.
Where FAASF comes in is when the higher-earning spouse reaches full retirement age. At that point, the higher-earning spouse can file as a spouse first, restricting his or her application to spousal benefits only. That preserves the growth of the higher earner's own Social Security benefit, and typically, the higher earner waits until reaching age 70 before claiming a benefit based on his or her own work history.
There are two main advantages of the FAASF strategy. First, the couple boosts its overall Social Security income during the period before the higher earner reaches age 70. Second and potentially more importantly, maximizing the higher-earning spouse's benefit not only boosts lifetime income under many life-expectancy assumptions, but also sets the stage for higher survivor's benefits if the higher-earning spouse dies first.
Of course, things don't always work out in such a way that the FAASF strategy achieves the best result. In particular, strategies that involve delaying full benefits never do as well when people fail to live to their full life expectancy. Those who have health conditions or medical histories that could have an adverse impact on lifespans should therefore take an especially close look before adopting such strategies.
Warning: Congress took away FAASF for most workers going forward
Unfortunately, a recent law change eliminated the FAASF strategy for most people in the future. The new law no longer allows someone to apply only for spousal benefits at full retirement age, instead deeming them to have applied for their own retirement benefits as well. That takes away much of the benefit of the strategy.
However, a grandfathering provision in the new law left the FAASF strategy available for some. If you turned 62 by the end of 2015, then you can still file a restricted application for spousal benefits once you reach full retirement age. Those who turn 62 in 2016 or later will not be able to use the FAASF strategy effectively.
In general, if you're eligible, the FAASF strategy can be a good way to get more from the Social Security you've earned. By making the most of both spouses' benefits, you can add substantially to your retirement income.