How and why to file for Social Security benefits online

More than 50% of all prospective retirees now file for their Social Security benefits online, according to the Social Security Administration. That’s a safe and efficient option even for people who want to exercise creative claiming strategies.

I used to recommend that individuals who wanted to do anything out of the ordinary — such as file and suspend their benefits when they reach full retirement age or restrict their claim to spousal benefits at 66 — make an appointment for a face-to-face interview at their local Social Security office.

Not anymore. Given the shrinking SSA workforce and the increasing demand for services from aging baby boomers resulting in long waits on the phone or for in-person appointments, I think online applications are the way to go.

Part of my decision was based on a recent conversation with Andy Landis, a former Social Security employee and author of “Social Security: The Inside Story,” which I consider the bible of Social Security books.

HORROR STORIES

“I continue to hear horror stories from people who try to claim benefits by phone or in the office,” Mr. Landis told me recently. “I have yet to hear any horror stories from people who did it online.”

If you still have doubts, check out “How to Apply Online for Retirement, Spouses or Medicare Benefits.” The two-page publication includes screen shots so you and your clients know what to expect when applying online for Social Security benefits. The whole process takes about 15 minutes and you can save your application and resume the process at a later time once you receive a re-entry number.

You can use the online application to suspend your benefits up to age 70 when they are worth the maximum amount or to file a restricted claim for spousal benefits.

The application will ask for your name, Social Security number and date of birth. It will also ask for the name and date of birth of your current and any former spouses, if applicable, the date and place of any marriages and the dates of divorce or death of a spouse, if appropriate.

The application asks about your employment or self-employment, military service, whether you earned credits under another country’s social security system or if you expect to receive a pension from a state, local or federal government. It asks about your citizenship status and requires a bank account number for direct deposit of your benefits.

The application will then ask you when you want to start your benefits. That’s the tricky part. The earliest you can apply for benefits is four months before you want your benefits to start. If you want benefits to begin within that time period, it’s simple.

But say you want to file and suspend your benefits when you reach your full retirement age of 66 in order to trigger a spousal benefits for your mate or a dependent benefit for a minor or disabled child — both of which are worth as much as 50% of your full retirement age benefit — while your own benefit continues to grow. How do you do that on an online application?

You request your benefits to begin when you turn 66. Later, in the “remarks” section near the end of the application, write: “I want to suspend my benefits.”

LIKE A SECRET HANDSHAKE

Unfortunately, it is a bit like a secret handshake. If you didn’t know you could do it, there is no indication on the online application that suspension is an option.

SSA will review your application once it is submitted and then contact you by phone, usually within a few days, to verify your intentions.

In an effort to increase transparency, I think SSA should include a notice directly on the online application that explains how anyone who is full retirement age or older can request a suspension of their retirement benefits. I’ve sent this suggestion to the SSA as part of its open government initiative.
“I realize that it is possible to request an immediate start to retirement benefits and then to write ‘I want to suspend my benefits’ in the remarks section of the application, but this procedure is neither obvious nor intuitive,” I wrote on the public comments website. “Why not include information about the ability to file and suspend directly on the application so more people will learn about the option to earn delayed retirement credits?”

If you agree with me, I suggest you do the same by sending your comments.

It’s a bit easier if you want to restrict your claim to spousal benefits at 66 to allow your own retirement benefits to continue to increase until age 70. There is a box on the online application that says, “If you are eligible for both retirement benefits and spouse’s benefit, do you want to delay receipt of retirement benefits?” Check yes.

If you elect to collect only spousal benefits (assuming your spouse has either claimed benefits or filed and suspended their benefit to trigger a spousal benefit for you), you will have to apply for your own retirement benefits when you turn 70.

(Questions about Social Security? Find the answers in my ebook.)

Related Topics: Social Security Rules