#109 - Social Security Rules That No Longer Apply

Eric Blake: Welcome to another episode of The Simply Retirement Podcast, where we want to educate and empower women to live your retirement on your terms. I'm your host, Eric Blake, practicing retirement planner for over 25 years, founder of Blake Wealth Management, and I would not be the man I am today without the women in my life. Joining me again today is Wendy McConnell. Wendy, how are you?

Wendy McConnell: I'm good. How are you doing?

Eric Blake: I am good. So I'm going to tell a little story about my wife. She doesn't always like when I mention her on the podcast. I haven't done it too much, but it kind of makes her worry a little bit for whatever reason. But I am going to tell this. She is going to meet my daughter to pick up the grandbaby today.

Wendy McConnell: Okay.

Eric Blake: And she was floating out of the door. She did stop enough to give me a kiss as she walked out the door, but that was about all I was getting. She was out the door.

Wendy McConnell: She's got grandbaby eyes.

Eric Blake: It was kind of funny. I didn't laugh at her, but I'm excited too, of course. It's great. It is somewhat exhausting, but I'm very excited to have her with us as well. She's going to be with us for about 10 days. It's going to be fun.

Wendy McConnell: It's like grandparent camp.

Eric Blake: Something like that, yeah. And that's very much what my wife treats it as. It's like Grandma Camp, or Donna Camp. She goes by Donna. Her grandmother went by Donna because her brother couldn't say Grandma, and Dawn's name is obviously Dawn, so he kind of combined all that and came up with Donna. And so now that her name is Dawn, that's what she wanted to go by. So she's Donna.

Wendy McConnell: Okay. So that's not like Mom-Mom in another language or something. It's just totally made up.

Eric Blake: Yep. That's what she wanted to be called, because that's what her grandmother was called, and the baby stuck with that. For me, we started with Grandpa, and she said Papa, so now it has become Papa. So she got her choice on that one, but Donna was pre-chosen.

Wendy McConnell: Well, and then, you know, that's how it goes. I remember there was this huge discussion between my mother and my sister about what she wanted to be called. Would it be Grandma? Would it be this? And then she just started calling her Mom-Mom. I don't know where it came from or how she came up with it, but my niece just started saying Mom-Mom.

Eric Blake: Yeah. You never know. My grandmother, as we're recording this, turns 91 today.

Wendy McConnell: Wow.

Eric Blake: And she is MeeMaw. That's what I came up with. I think I've shared this before, that I called my grandfather Daddy because he was pretty much who he was for me.

Wendy McConnell: Okay.

Eric Blake: And so I think MeeMaw was some version of Mama or whatever. I don't know how I came up with that one. But I named her, and I've told this before. I have all kinds of street cred in Amarillo, where I'm from, when I tell people I was the one that named her MeeMaw, because everybody calls her MeeMaw. Friends, family, everybody we know calls her MeeMaw. When I say, "Hey, I'm the one that named her," I move way up in everybody's eyes when I tell them that.

Wendy McConnell: I thought that was like a Southern thing because my relatives in West Virginia called my grandmother and grandfather MeeMaw and PeePaw.

Eric Blake: See, it's always an interesting story about where grandparents get their names from. But yeah, so Papa and Donna. We've got Papa and Donna Camp coming up very shortly here in the next couple of hours.

Wendy McConnell: Oh, have a great time. Have a great time.

Eric Blake: Well, let's get to the real stuff here. As you know, we've done a number of episodes on what options you have with Social Security, key decisions you have to make, and then, of course, probably more importantly, processes for helping people make an informed decision. But today I'm going to do something a little bit different. We're going to discuss things you can't do with Social Security, primarily around rules that no longer apply.

Because there is so much outdated information still circulating out there, I'll have women ask, "Well, can I do this or can I do that?" Sometimes it comes from a friend or coworkers that are trying to help. Sometimes it comes from someone who made a decision many years ago when the rules were different. And sometimes it comes even from advisors who may not be fully up to date on how some of these rules have changed.

Very often, it comes from something you hear that starts with, "They said," or, "I was told that you can..." Something along those lines. That's usually how it starts. "They said that I can do this," or, "They said I could do that." A lot of this stems from a law change that actually wasn't that long ago, which I think also creates some of this confusion. A number of rule changes came about from what was called the Bipartisan Budget Act of 2015, which phased out a number of the filing strategies and options that used to be available. So that advice may have been absolutely correct for someone else, or maybe at a different time under a different set of rules, but they just don't apply today.

I thought it would be helpful to clarify some of these issues because within the last couple weeks, I've gotten two questions that are very similar, and I wanted to share those because they speak to this exact issue. The first one said, "I am divorced. Can I collect my ex-husband's Social Security at age 62 and let my own benefit continue to grow, and then switch to mine at 67?"

Wendy McConnell: Yeah.

Eric Blake: My assumption on this is, because she doesn't refer to survivor benefits or anything specifically, I did go with the assumption that we're talking ex-spousal benefits based on how the question was phrased. But the next one is an even more drastic example of incorrect information. She's asking the right questions, but she's getting the wrong information. She said, "Good morning, Eric. I have a very important question and I'm getting different answers." That's a problem right there, right? "I was married for 25 years and have been divorced for five years. My ex-husband is 62, turning 63. I will be turning 65 next month. I was told I could collect his Social Security now and then switch to mine at full retirement age. I do not want to make a mistake and be locked into receiving only half of his benefit forever. What should I do?"

Wendy McConnell: Well, I'm glad that she's asking first.

Eric Blake: Absolutely. And now she's asking the right person because it appears that she's been asking somebody who's giving her incorrect information. These are obviously great questions, and fundamentally, they're the same. I'm going to treat them as the same based on how the first one was phrased. But the second one really stresses the importance of not only asking the right question, as I've talked about so much, but also asking the right person, asking the right professional.

More importantly, they highlight exactly why this conversation matters so much, because the strategies being described in both of these questions used to exist, but no longer work for most people today. So I wanted to make sure we clarify what's going on. I also want to talk about a few different strategies that I hear from time to time that people think are still available when they're really not. So I want to hopefully bring some clarity to that.

And also, just so everybody doesn't forget, if you do have a question, maybe you have a specific Social Security filing strategy, or you're wondering, "What am I eligible for?" If you'd like to have that addressed on the podcast, be sure to visit thesimplyretirementpodcast.com/askeric.

All right. So let's get back to the core idea of both of these questions. The strategy sounds somewhat simple, where I'm going to take one benefit now, let the other benefit grow, and then switch, right? That's the concept they're asking about. For many years, this was actually a valid approach. But today, for most people, it no longer works, and there's now a rule called deemed filing. Basically, what that means is when you file for Social Security, if you are eligible for more than one type of benefit, you are generally considered to be filing for all benefits you're eligible for at the same time.

Wendy McConnell: Why?

Eric Blake: If I were eligible for a spousal benefit, or an ex-spousal benefit, and eligible for my own retirement benefit, those are technically two separate types of benefits. But when I apply, I can't pick or choose. I'm applying, and I'm going to receive whichever one is greater.

Wendy McConnell: All right.

Eric Blake: Make sense?

Wendy McConnell: Well, no. I don't like it. It doesn't make sense.

Eric Blake: So again, if you're eligible for both your own retirement benefit and a spousal or ex-spousal benefit, you generally cannot choose to take one and then delay the other. Social Security treats that filing as you're applying for both and pays under those rules accordingly.

So back to the question, can you take your ex-spouse's benefit at 62 and then switch to your own later? Again, in most cases, the answer is going to be no. There is a concern that came up with that question that I want to address, and that is the fear of being locked into half of the ex-spouse's benefit forever. But basically, that's not how it works.

If you're eligible off of an ex-spouse's record, the benefit can be up to 50% of their full retirement age amount. But Social Security is still going to look at both benefits when you file. If your own benefit is higher, which it sounds like it would be in her case, you're going to receive your own benefit instead. If the ex-spousal benefit happened to be higher at the time, you would receive that instead. But again, that's going to be determined at the time that you file. So it's not the old strategy of taking one and switching later. We're going to talk about how that actually works here in a little bit, and what options you may still have around that.

But again, as I always stress, you must be aware that if you file before retirement age, I want to point this out, this is critical, if you ever file before full retirement age, your benefit is going to get reduced. Okay? So if you're filing for your own benefit, you're going to receive something less than your own full retirement age benefit. If you're filing for an ex-spouse's benefit before full retirement age, you're going to receive less than that maximum 50% benefit.

Wendy McConnell: They're always going to give you a little bit of a penalty for taking it before your retirement date.

Eric Blake: If you file early, they're going to ding you. Absolutely.

Wendy McConnell: Yep.

Eric Blake: Now, here's where we also need to make an important distinction. For a current spouse, so let's say both spouses are still married, you actually can start your own benefit. She could start her own benefit first and then later become eligible for a spousal add-on once her spouse has filed. Okay? But that's different from what many divorced women have been told.

If you're divorced, you are subject to those deemed filing rules regardless. Meaning that if you're eligible for two different benefits, when you file, you'll receive the larger of the two that you're eligible for. This is exactly why listening today can create some confusion. There are different rules that apply to married spouses versus divorced spouses, so you've got to be aware of that as well.

Hey, everyone, it's Eric. Hope you're enjoying today's episode. I want to take just a quick moment to share a resource I think you'll find valuable. Have you ever found yourself asking, "How much can I put into an IRA this year?" Or, "How much can I earn before my Social Security gets reduced?" Those are the kinds of questions that come up all the time, and the answers change, often more than you'd think. That's why we created a free two-page tax and retirement planning cheat sheet, updated for 2026, with the key tax, Social Security, and retirement numbers all in one place. You can download it right now at thesimplyretirementpodcast.com/retirementcheatsheet. It's a simple reference you can keep handy whenever questions come up. Now, back to the episode.

Another rule that used to be very powerful was file and suspend. This is a strategy that created a lot of flexibility in the past. It was called file and suspend, which allowed someone to file for their own benefit at full retirement age, but then immediately suspend it, which then allowed the spouse, typically the lower-earning spouse, to start collecting their spousal benefit.

Wendy McConnell: Hmm, yeah. That sounds way convenient, that the government wouldn't like it.

Eric Blake: And at the same time, the higher-earning spouse would file at full retirement age, allow the spouse to file for spousal benefits, but by then suspending it, it would allow your own benefit, the higher-earning spouse's benefit, to continue increasing.

Wendy McConnell: Yeah.

Eric Blake: Right? Again, that changed with the Bipartisan Budget Act of 2015. So today, if you suspend your benefit, it also suspends any benefits based on your record. Specifically spousal benefits, and potentially any benefits that a child may be receiving based on that primary earner as well. So you can still do it. You can still suspend your benefit at full retirement age, but any benefits connected to that are going to stop as well. That's really where the big change occurred with this particular strategy. So again, when you suspend, any other benefits are also going to be paused. They may be connected to spousal benefits, child benefits, anything connected to that higher earning benefit record or earnings record will have to pause as well.

Wendy McConnell: Got it.

Eric Blake: Now let's talk about a concept called restricted application, and it's a very important term. Filing a restricted application means that at the time you file for benefits, you're eligible for more than one benefit. It may be a retirement benefit and a spousal or ex-spousal benefit. It might be a retirement benefit and a survivor or ex-spouse survivor benefit.

So again, we kind of touched on this in segment one, but one strategy that was really valuable was a strategy where the lower-earning spouse would file for their own benefit. The higher-earning spouse would file a restricted application for spousal benefits, receive half of the lower-earning spouse's benefit, and allow their own benefit to continue to grow to age 70.

Wendy McConnell: Okay.

Eric Blake: So the look on your face tells me you're absolutely confused.

Wendy McConnell: Can you just repeat it one more time? I'm going to pay closer attention.

Eric Blake: Okay. And again, keeping in mind this rule is no longer available. This strategy is no longer available.

Wendy McConnell: Right. Oh, well then I don't care. Keep going.

Eric Blake: But I get asked about it, so we've got to clarify it.

Wendy McConnell: All right, let's clarify it.

Eric Blake: So thinking about the higher-earning spouse, the idea is that they're eligible for two separate benefits. Technically, they were eligible for spousal and their own retirement benefit. Well, you could never file for spousal benefits unless the other spouse had filed for their benefit. So the lower-earning spouse files.

Wendy McConnell: Uh-huh.

Eric Blake: The higher-earning spouse files a restricted application specifically to start receiving spousal benefits without touching their own benefit, allowing their own benefit to continue to grow to 70, and then they switch. So that idea of filing for a lower benefit now and then switching to a higher benefit later, that's where these questions that I read earlier originate from. The thought that I could do this, that I could file for a lower benefit now based on a spouse or ex-spouse and switch to my own higher benefit later.

Wendy McConnell: They've really worked through the loopholes and figured it all out at this point.

Eric Blake: Absolutely. But there's so much confusion. People think that these strategies are still out there, and they're trying to make educated decisions. But again, what information are you receiving? Who are you asking? What are you asking? You want to make sure you've got accurate information when you're making these big decisions.

So now let's talk about why restricted applications are still very important, and that's when it comes to survivor benefits. If your spouse or ex-spouse passes away, you may be eligible for both a survivor benefit and your own retirement benefit. In this situation, you may have the ability to choose which benefit to take first.

Wendy McConnell: But you can't have both.

Eric Blake: Not at the same time, but that capability to potentially switch is what's key here.

Wendy McConnell: Okay.

Eric Blake: But in order to do that correctly, you need to be very clear about what you're filing for. So when you go in to file, whether you schedule an appointment, like for survivor benefits, you have to schedule an appointment. For retirement benefits, you can do that all online. But in order to make sure you're doing this correctly, you've got to be very clear about what you're actually applying for.

In many cases, you're effectively filing a restricted application for one specific type of benefit while allowing the other benefit to continue to grow. So exactly what we're talking about, but now we're specifically talking about survivor benefits, where you do have the potential to switch. Probably just putting an example out there may be the best way to help people understand this.

Let's say the wife is 62. The husband was 67 and he passes away. Let's make sure we say that she's eligible for a benefit off her own record. She worked enough that she has her own retirement benefit. He was 67, he passes away. At that point, she is technically eligible for two different types of benefits, her own retirement benefit and a survivor benefit. So at that point, she has to ask herself which of those two benefits is going to be higher.

If we determine that her own benefit ultimately will be higher long term, the decision now is to say, "Okay, I want to file for survivor benefits today to receive survivor benefits based off his record so I can allow my own benefit to continue to grow to age 70 to max it out." But when you go to file, you are technically filing a restricted application to specifically receive survivor benefits.

What can get people in trouble is saying, "Well, I'm just going to file," not realizing which benefit they're filing for. They might go online and not realize that, "Well, I'm applying for benefits," and actually apply for their own benefit instead.

Wendy McConnell: So they can do this online, but they have to say it's a restricted one.

Eric Blake: You cannot file for survivor benefits online. You've got to actually schedule an appointment.

Wendy McConnell: Okay.

Eric Blake: But again, not everybody's aware of that. Just getting this information out there helps people make an educated decision. When we're talking about restricted applications, that's allowing you to specifically choose which benefit you want to file for first so you can allow the other benefit to continue to grow.

Wendy McConnell: Okay.

Eric Blake: So back to our example. If she's 62, he was 67, he passes away, she files a restricted application to begin receiving survivor benefits and allows her own benefit to continue growing to age 70 to maximize that benefit.

Wendy McConnell: Right.

Eric Blake: Or the reverse scenario, maybe his was the greater benefit. He was the higher earner. She now can say, "Well, instead, I'm going to file for my own benefit, just a regular retirement application, file for my own." And then when she turns 67, to maximize the survivor benefit, she switches at 67. So it's still the concept of I'm going to take a lower benefit now and switch later, but in this case, for restricted applications, we're specifically talking about survivor benefits, not the idea that if both are living, I can do that.

Wendy McConnell: Right.

Eric Blake: That's where the confusion really comes in. The strategy that I described just a little bit ago, where the higher-earning spouse files a restricted application to start receiving spousal benefits off of a younger or lower-earning spouse and then switches to a higher benefit later, that is no longer available. But the survivor benefit component of it is still something you can do. You can still file for one and then switch to a higher benefit later. But again, you've got to make sure you understand, what am I filing for first?

Wendy McConnell: And make sure that survivor means an appointment.

Eric Blake: Yes.

Wendy McConnell: I think that's the most important thing. When you're going on, it seems like that's just falling off to the wayside, so I just want to continue to point that part out.

Eric Blake: Absolutely. So when you're just filing for typical Social Security benefits, your own retirement benefit, you can do that online. It's actually very straightforward, very relatively simple to file for retirement benefits. To file for survivor benefits, you must schedule an appointment. That could be a phone appointment. It can be an in-person appointment, but it has to be an appointment in order to actually apply for a survivor benefit.

Wendy McConnell: Okay, got it.

Eric Blake: Now, this one is not necessarily a rule that changed several years ago, but there's still a lot of confusion around it, and that is what happens when I claim and I'm still working. While this one hasn't gone away, it's just misunderstood. Many people still believe that if you work and you take Social Security early, you're going to lose benefits. That's not technically the case. It's basically what I would call a temporary reduction in your income if your income exceeds certain limits. But the benefits are not lost.

Basically, what happens is, let's say I file at 63 and I'm still working, and my full retirement age is 67. If I make above a certain amount, it's about $24,000 if I'm more than one full year from my full retirement age. So if I earn more than that, I might have my benefit reduced, or I will have my benefit reduced. But what actually happens is those benefits are just going to be recalculated into your overall benefit once you've actually reached full retirement age. It's going to increase that full retirement age amount based on whatever the reductions were while you were working and receiving benefits under full retirement age.

So I guess this is one of those areas where people think they know what it is, or a lot of people still aren't really completely familiar with what the earnings test is or that it's out there. They don't realize that I can't work as much as I want to and still receive Social Security if I'm under full retirement age. So I want to provide a little bit of clarity there. Even though it's not necessarily something that's recently changed, it's still one of those areas that's really misunderstood.

Wendy McConnell: Yep.

Eric Blake: So let's talk a little bit about why all this stuff matters, because outdated information can lead to costly decisions, and I see this way more often than you might think. Someone read something years ago. Someone heard a strategy from a friend. Someone assumes the rules work the way they used to. What happens a lot of times is this person was able to do this, but they're a little bit older.

Wendy McConnell: Right.

Eric Blake: And they're thinking that still would apply to me, even though I'm a few years younger, and unfortunately, it's just not the case. Worst case scenario, you're making a decision that can't be easily reversed. With Social Security, there are a few strategies here and there that might help you make up for a mistake, but there's going to be a point where I'm just kind of stuck, and the decision I made, that's it.

So it's just a matter of making sure we understand the information. Especially for women who are navigating retirement after a divorce or on their own for whatever reason, this becomes even more important because you're talking about lifetime income. I've talked about this a lot, that with Social Security, it is typically the single source of guaranteed lifetime income that will actually increase based on cost-of-living adjustments.

Unfortunately, these rules, as I'm sure you all agree, are not very intuitive.

Wendy McConnell: No.

Eric Blake: What you think might make sense typically doesn't. It's like, just think about, "Well, if I thought that makes sense, it's probably the opposite of it."

Wendy McConnell: Right. And then they'll change it in a year anyway.

Eric Blake: Right. Again, we know there's potentially changes on the horizon when we're talking about concerns about the liquidity of the Social Security system and those types of things. So there are changes that are coming. We don't necessarily know what they're going to be, but I think that really comes back to saying, okay, why is working with a financial professional who stays current on these types of rules so important? I think this is a big component of that.

Especially when we go back to that second question, where she's asking somebody. She doesn't necessarily share who she's asking, but it sounds like she's asking multiple people, and she's getting the wrong answer.

Wendy McConnell: Right. She's like, "Well, my neighbor's really good with money, so he definitely knows."

Eric Blake: And again, the difficult part is it may be that he's actually giving the right answer, but the right answer from many years ago that just doesn't, it no longer is good. So that's where it really becomes challenging.

Wendy McConnell: Mm-hmm.

Eric Blake: Again, these strategies that worked a few years ago just don't apply today. So it's really about understanding your options and what those trade-offs may be so you can make an informed decision.

Now that we've talked through some of these rules that no longer exist, I do want to share a few past episodes that we've done that can help you better understand what your options are based on what does exist, and hopefully based on your specific situation. We've done a few of these episodes. I'll start with Episode 85, where we did Essential Rules for Women in Divorce Cases. Episode 63 was Social Security Planning After Divorce, just understanding some of the critical rules and mistakes to avoid. Episode 37 was the Top Five Questions on Social Security Survivor Benefits. Episode 24 was Understanding Spousal and Ex-Spousal Social Security Benefits. And then last was Episode 14, where we did the Top Five Things Every Woman Should Know About Social Security.

Wendy McConnell: All right.

Eric Blake: So those are the ones I would get everybody back to. Take a listen to those if you want the right information.

Wendy McConnell: There's some resources for you. Go take advantage.

Eric Blake: Excellent. Well, as always, thank you for tuning in. Thank you, Wendy, as always, for being here with me once again. If you're trying to make a decision around Social Security and you're finding yourself sorting through these different options, conflicting advice, and outdated strategies, just know that you're not alone. This is exactly where having a personalized plan can really make a meaningful difference. If you'd like help understanding how your Social Security benefits fit into your overall retirement income plan, you can visit getmysimplyretirementroadmap.com to schedule a call with our team.

That's it for today's episode. For all the links and resources that we've mentioned, you can visit thesimplyretirementpodcast.com. Don't forget to like, follow, and share the show.

And until next time, please remember, retirement is not the end of the road. It's the start of a new journey.