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Don't lose out on this Social Security benefit

Nearly 6 in 10 baby boomers now expect Social Security to be a major source of income in retirement. That's up from just over 40 percent two years ago, according to a recent survey by the Insured Retirement Institute.

Yet with the recent changes in Social Security claiming, brought about by the Bipartisan Budget Act of 2015, time is running out. For those in their 50s and 60s, now is the time to start planning how to make the most of this guaranteed stream of retirement income.

One Social Security strategy that could add thousands of dollars to your retirement income is referred to as "restricted application." Basically, the plan is to make a Social Security benefit claim now in order to claim more later.

Why should couples take advantage of this?

"The most important strategy for married Social Security participants is to get the primary worker's benefit as high as possible," said financial advisor and CPA James Lange, president of Lange Financial Group and author of "The Little Black Book of Social Security Secrets." By filing a restricted application, "the higher benefit can be enjoyed by husband and wife while they are both alive," he said.

Additionally, if one of the spouses passes away, the survivor will receive the higher benefit. "The restricted-application technique will provide some income to the couple, while the primary earner's benefit will grow at 8 percent per year between age 66 and 70," Lange said.

Here's how it works: One spouse files and takes his or her Social Security benefits. The other spouse — who must be at least 66 — files a restricted application to collect only a "spousal benefit," which is half of their spouse's full retirement-age benefit. He or she allows his or her own benefit to grow — and then starts collecting that benefit later, preferably waiting until age 70.

How much more will it increase? Your Social Security benefit can grow by 8 percent a year from age 66 to 70 — that's a pretty big return on your investment.

"Make sure that the amount is about half of the worker's benefit and the Social Security number shown is the worker's Social Security number. If something isn't right, it should be corrected without delay." -James Lange, president of Lange Financial Group

Now a few caveats. In order to qualify under the new Social Security claiming changes, one person in the couple must be 62 or older by Jan. 2, 2016, to be "grandfathered" into this strategy — and can't actually file a restricted application until age 66.

If you think you qualify, call the Social Security Administration at (800) 772-1213 or log on to www.ssa.gov.

After you have filed a restricted application, you should get an award letter. "Make sure that the amount is about half of the worker's benefit and the Social Security number shown is the worker's Social Security number," Lange said. "If something isn't right, it should be corrected without delay."


Also, whether or not you qualify, check out online Social Security planning tools at Financial Engines and AARP websites to see if there are other strategies that may work for you and your spouse to maximize your benefits.

Finally, consult a financial advisor to figure out how your Social Security benefits fit into your overall retirement plan.