File and Suspend to help Maximize Social Security Benefits

Are you old enough to be eligible for Social Security retirement benefits, married, and still working? If so, you need to know about the Social Security file and suspend strategy.

You probably know that your Social Security benefits will increase if you postpone taking them. For example, if you are still working after your full retirement age (currently 66) you can delay claiming your Social Security retirement benefit until you are age 70. This can mean a significant increase in the monthly amount you will eventually receive (and the widow’s benefit your spouse may someday get). 

Your monthly benefit will be higher because you acquire delayed retirement credits. You acquire a credit for each month you postpone taking benefits after you reach full retirement age. You can continue to acquire credits until you attain age 70. If you delay taking your benefits until age 70 your monthly check should be 32% higher than if you had started at age 66. 

But what if you are married and your non-working or low earning spouse has also attained full retirement age. For the reasons noted above, you don’t want to start your benefits now. But the problem is that under Social Security rules, the worker spouse has to claim his or her Social Security benefits in order for the non-worker spouse to receive spousal benefits under the worker’s record. 

What can you do? 

File and Suspend:

The answer is to use the “file and suspend” strategy which is authorized under the “Senior Citizens Freedom to Work Act of 2000.” In this way a non-working or low earning spouse can get his or her spousal benefits at full retirement age while the worker continues to postpone until age 70.

Let’s say Jeff’s is already 66 and his wife Marian will reach age 66 in a few months. Marian worked for a few years but then stopped in order to concentrate on raising the couple’s children. Marian never worked the 40 quarters needed for her to qualify for Social Security on her own work record. She would like to claim spousal benefits based on Jeff’s work record. But Marian can only make a claim for spousal benefits after Jeff has applied. 

Here what they need to do:

1^st step: Jeff applies for Social Security.

2^nd step: Marian applies for her spousal benefit;

3^rd step: Jeff applies to suspend his benefit. 

The result is that Marian will start receiving spousal benefits, and Jeff will be able to continue to receive delayed retirement credits until he reaches age 70. In addition, if Jeff dies first, Marian will receive an increased widow’s benefit that includes Jeff’s delayed retirement credits.

Although the above three steps are required, you may be able to accomplish them all during one visit to your local Social Security Office. (Set up an appointment in advance and tell Social Security that you intend to file and suspend).  

The file and suspend strategy can be utilized anytime the working spouse has attained full retirement age and the low earner spouse is over age 62. But it is critical that the low earner spouse claim their benefits no later than at full retirement age - because there is no increase in the spousal benefit after the full retirement age the spouse.

Contact Social Security three months before the date you want spousal benefits to start in order to get the application ball rolling.   

Social Security is complicated. It is wise to seek professional advice about your Social Security benefits as you approach eligibility age. Your elder law attorney or CPA may be able to help. You can also get information by calling the Social Security Administration at 1-800-772-1213 or at its website, www.socialsecurity.gov. 

Don’t be discouraged if the first person you talk with at Social Security is unfamiliar with the file and suspend procedures. Be persistent in order to get the benefits to which you are entitled.  

  

Further Reading:

Retirement Planner: Suspending Retirement Benefit Payments (Social Security Administration)

Wondering About File & Suspend? Here's the Skinny (Forbes)

Social Security for Two (Journal of Accountancy)

Strange but True: Claim Social Security Now, Claim More Later (Center for Retirement Research) 

Social Security POMS GN 02409.110 Conditions for Voluntary Suspension

Social Security POMS GN  02409.130 Voluntary Suspension Reinstatement