In November 2015, some key rules in the Social Security program were changed in provisions embedded in the Bipartisan Budget Act. The new rules essentially make spousal benefits less important. Here’s why.

Prior to the big changes, you could file for spousal benefits on your spouse’s Social Security record when you reached full retirement age, and then ask for a restricted application. The application would allow you to defer taking your retirement benefits in favor of your spousal benefits. This allowed you to take advantage of delayed retirement credits of 8 percent per year until age seventy while you were also drawing spousal benefits equal to 50 percent of your spouse’s retirement benefits. We’ll discuss delayed retirement credits in more detail later. Suffice it to say here that Congress got wise to this supposed loophole in spousal benefits after the alleged double-dipping strategy hit the news. The outcry led to legislative action that resulted in the changes that closed the loophole.

Now you can’t file an application to restrict your benefits. The Social Security Administration will “deem” you, whereby you’ll get whichever benefit is greater, either your spousal benefits or your retirement benefits. In most cases, your retirement benefits will exceed your spousal benefits, so spousal benefits essentially become moot for most of us. Of course, if you’ve never worked and paid into Social Security, spousal benefits as a current spouse or as an ex-spouse are very important if you meet the eligibility requirements.

However, if you were born in 1953 or earlier you can still file an application to restrict your benefits to spousal benefits while deferring your retirement benefits to grow them until age seventy. This is the case even if your retirement benefits exceed your spousal benefits. If you were born in 1954 or later, you have to take the higher of the two benefits.

The end result of the changes is that those of us born in 1954 or after can’t defer our retirement benefits while taking spousal benefits. That’s a loss of 24 percent in delayed retirement credits for those of us whose full retirement age is sixty-seven. Some sources estimate that the loss amounts to as much as $50,000 per couple in some instances!