What is FAASF?
“File as a spouse first”
“File as a spouse first”
FAASF, or “file as a spouse first,” is one of several Social Security filing options for claiming benefits. In FAASF, a spouse can file for Social Security and spousal benefits from his/her spouse’s higher-earning Social Security account until the age of 70.
Social Security in the US refers to an insurance scheme by the US Federal Reserve that provides benefits to pensioners and those who are unemployed or disabled. Benefits include retirement and disability income, Medicare, and death and survivorship benefits. It is one of the largest government programs in the world, paying out hundreds of billions of dollars per year.
Retirement benefits are paid out monthly to retired workers and their spouses who, during their working years, contributed to the Social Security system. One of the strategies to get the most out of Social Security benefits involves filing as a spouse first, also known as the restricted application strategy.
A married recipient of Social Security is entitled to two benefits: their own retirement benefits based on his work history, and spousal benefits based on their spouse’s work history. In most cases, people file for both the benefits at the same time. The amount that they receive as a monthly benefit is the greater of their retirement or the spousal benefit.
For example, if A’s retirement benefit is $900 per month, but his spousal benefit is $1,000, he’d get a check for $1,000, $900 of which is based on his own work history and $100 of which is his excess spousal benefit.
Under previous laws, once one reaches full retirement age, they could file a restricted application and receive only spousal benefits. The retirement benefits could grow over time, thus earning delayed retirement credits, which can be claimed later at a higher amount. For instance, in the same example above, A could “file as a spouse first,” and get his full $1,000 spousal benefit after reaching full retirement age. His $900 retirement benefit would thus earn delayed retirement credits, and if he waits until he is 70 years old, it would’ve grown to $1,188. Therefore, the FAASF strategy would get him an extra $188 per month from age 70 for the rest of his life.
Of course, implementing all of the above maneuvers and strategies would only work if the couple receives income from other sources to support them while delaying their Social Security benefits.
The manner in which a couple can maximize their Social Security earnings can be explained as follows:
A and B are a couple where A is the lower-earning spouse. Therefore, A would file to receive Social Security benefits based on his own earning history. That would bring in a Social Security income to help the couple meet their financial needs, also allowing B’s eventual monthly benefit to continue to grow. Where FAASF comes in is when B reaches full retirement age. At that point, B can “file as a spouse first,” restricting her application to spousal benefits only. That preserves the growth of her own Social Security benefit, and typically, B waits until reaching age 70 before claiming a benefit based on her own work history.
Following recent legal changes, the restricted application strategy is now available to a select group only. In late 2015, lawmakers took steps to eliminate some popular Social Security strategies, including FAASF.
Earlier, most people couldn’t use the FAASF method because most of them claimed early benefits, and one couldn’t use the strategy if one hadn’t reached full retirement age. Before Full Retirement Age (FRA), one was automatically deemed to have filed both for the retirement benefit and for a spousal benefit, even if one didn’t want to. The new rule change extends that automatic treatment through age 70, effectively wiping out its implementation.
However, the law included a clause that will still allow some people to use FAASF in the future. Specifically, if one turned 62 by January 1, 2016, he or she would still be able to use the FAASF strategy. The repeal of restricted applications is a serious blow to some families’ retirement planning. If one is old enough to have the option of using this strategy, he or she should make sure to consider it fully before losing the chance forever.
Social Security planning is crucial for everyone. People with significant assets should carefully consider the lifetime benefits, as well as the tax consequences, of Social Security. The benefits often have a crucial role to play in dictating an individual’s or a couple’s retirement lifestyle. Therefore, proper planning could well determine how one spends their later years.
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