I just finished reading "Get What's Yours" for Social Security and am confused by Gotcha #2 in chapter 16: "Once you file for your retirement benefit, you can never take an auxiliary benefit by itself." I am the significantly higher wage earner and turned 66 in November of 2016. My wife turns 65 in January of 2017. My understanding is that we are exempt from deeming due to our ages. Using an online calculator and other resources, it has been suggested that my wife could file for her earned benefits in January of 2017, and I could file for spousal benefits at the same time with a restricted application specifically excluding my own earned benefits. Then in November of 2020 when I turn 70, I can file for my earned benefits and my wife could file for her spousal benefits. I'm worried about doing this since it seems to contradict Gotcha #2 in that my wife would, in fact, be filing for another benefit by itself after having received her retirement benefit for several years. I would enormously appreciate your clarification on this scenario. Thank you.
Your basic plan sounds doable, however, your wife won't be able to switch to just a spousal benefit on your record when you file for your own benefits. Instead, she would continue to receive her own retirement benefit, which will be reduced if she starts it prior to age 66, plus potentially an excess spousal benefit from your record. Once a person starts drawing benefits on their own record, that becomes their primary benefit for life. If they subsequently become eligible for another type of benefit (e.g. spousal, widow's), they can at best only receive an excess benefit from the other record. Hence, Larry's 'gotcha' #2.
Here's an example of how your plan might work. Say John has a full retirement age benefit (PIA) of $2000, but will wait until age 70 to file. His benefit rate at that time will be $2640, inclusive of 32% in delayed retirement credits (DRC). John's wife Jane has a full retirement age benefit of $800, but starts her retirement benefit at age 65 and receives a reduced rate of $746. John is already age 66 when Jane files, so he files a restricted application for spousal benefits only and receives 50% of Jane's PIA, or $400. When John files for his retirement benefit at age 70, Jane then files for an excess spousal benefit which would be calculated based on 50% of John's PIA, minus Jane's PIA. Thus, Jane's excess spousal benefit would be $200 (i.e. $2000/2 - $800). That excess would then be added to Jane's own reduced retirement benefit of $746, making her ongoing total benefit $946.
This plan may or may not be your best option, depending on your and your wife's relative benefit rates. You may want to consider running the maximization software available on this website in order to be sure that you choose the best strategy.