In November 2015, federal lawmakers voted to eliminate the popular “file and suspend” Social Security claiming strategy, officially ending the practice the following April with the enforcement of a new set of “deemed filing” rules.
Nearly 10 years on, questions about deemed filing are still tripping people up — especially in situations of multiple marriages and divorce — and a number of related ThinkAdvisor case studies continue to generate comments and questions. The most recent came in this week from James in Austin, Texas, jumping off a case study published in April 2024 and considering “the case of two marriages and two divorces.”
In the scenario, Sherry, who does not have enough credits to be eligible for Social Security benefits based on her own work record, was married to Charles (a middle earner who is two years older) and Shaun (a high earner who is five years younger) for over 10 years each.
Importantly, based on their ages and life expectancies, Sherry is expected to outlive Charles but not Shaun. Thus, her projected survivor benefits are likely to be derived from Charles’ work record, despite Shaun having a meaningfully higher primary insurance amount — to the tune of $400 more per month.
Due to the deemed filing rules, if Sherry takes benefits from Charles’ record before becoming eligible for benefits on Shaun’s record, she must file on Shaun's record in her first month of eligibility — June 2024, in this scenario. At that point, Shaun would be getting a reduced benefit if he were to claim, resulting in Sherry's ultimate lifetime benefit projection being lower than it might have been when the “file and suspend” strategy was still allowed.
A Tricky Calculation
James’ question notes that he was recently asked for guidance by someone in a similar situation.
Again, in the ThinkAdvisor case study, Sherry is assumed to be five years older than the ex-spouse with the higher earning record. She is also not expected to outlive him and collect a survivor benefit based on that record.
In the real-life scenario, James explains, the age difference between the higher-earning ex-spouse and the individual with no working record is just two years.
“What I’m wondering is, what if Shaun (who had the higher PIA) was only two years younger than Sherry and not five?” James asks. “Would she be required (i.e. deemed) to file for the ex-spouse benefit based on his work record at age 64 since she had previously filed for an ex-spouse benefit from Charles at age 62? I think the answer is yes, but I wanted to ask an expert and Google has trouble with such detailed and complex questions like this!”
ThinkAdvisor reached out to Jim Blair, a former Social Security administrator and the author of the original case study, who seconded James’ perspective.
“Deemed filing does apply, so when an individual files for benefits they are deemed to have filed for all benefits due and would be required to take their own first and any spouse/ex-spouse benefit payable,” Blair explained via email. “They would be required to file off of the record that gives them the highest benefit.”
In the case study, when Sherry files, she is not eligible on Shaun’s record because he is younger than 62. Deemed filing, in turn, will require she switch to his record when he reaches age 62. That’s essentially similar to what the individual in James’ scenario will see play out, just on a different timeframe.
Additional Examples
The Social Security Administration shares a number of related case studies, including cases where both spouses are eligible for their own worker’s benefit and situations more like what Sherry faces. The examples also make an important point about the difference between spousal benefits and survivor benefits.
In one example, Maria turns 62 in Jan. 1, 2016, while her husband, Joe, is 65. They have each worked enough years to earn a retirement benefit, but Joe’s is substantially higher, to the point that Maria’s own full worker's benefit is less generous than her full spousal benefit.
In March 2020, Maria would have reached her full retirement age and filed for benefits. Under deemed filing, Maria must file for both her own worker’s benefits and her spousal benefit. That is, she can no longer file only for the spousal benefit and delay filing for her own retirement. As a result, she will receive a “top up” combination of the two benefits that equals the higher amount.
In another SSA scenario, Jennie is a 62-year-old surviving spouse. She is eligible for retirement benefits based on her work history, and she is also eligible for survivor benefits based on her deceased husband’s record.
Jennie starts her survivor benefit this year and only applies for surviving spouse benefits. She does not start her own retirement benefit, allowing it to grow. At age 70, she starts her own increased retirement benefit, which she will receive for the rest of her life. As the case study shows, the deemed filing rule does not affect her because it does not apply to surviving spouses. Thus, Jennie will receive the higher of the two benefits.
Credit: David Palmer/ALM
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