Congress recently put an end to a popular Social Security claiming strategy known as “file and suspend”. This was a popular strategy whereby the primary wage earner would file for Social Security Benefits, but suspend receiving them. This allowed the other spouse to collect benefits based upon the primary wage earner’s Social Security contributions while the deferred benefit amount for the primary wage earner continued to grow.
To be grandfathered in under the old rule, you must turn age 66 within 6 months after the law is enacted (approximately May 1, 2016). If you are considering this file and suspend strategy, be sure to act before it is too late.
Even with the elimination of the file and suspend strategy, it will still be possible to suspend your Social Security benefit starting at full retirement age and restart it at a higher level at age 70. However, you will no longer be able to provide your spouse or disabled child any benefits during the time it is suspended. According to Laurence Kotlikoff, a Boston University economics professor and author of the “Get What’s Yours: The Secrets to Maxing Out Your Social Security Benefits”, elimination of the file and suspend is important however, “the big game is still being patient” – in claiming benefits. (“The End of Social Security Loopholes: What Now?” New York Times – Dec. 5, 2015). In other words, the longer you wait to file for benefits, the more you can receive each month in retirement benefits.
To maximize your Social Security retirement benefit, it is more important than ever to determine what strategy is best for your situation. The potential strategy will depend on a number of factors such as:
- Your health.
- Your marital status
- Your work history.
- Your retirement income.
- Your retirement assets.
Although the new rules simplify matters by limiting the available options, when to file for Social Security benefits nonetheless remains a critical and complicated decision. Claiming too early or too late can cost you and your spouse hundreds of thousands of dollars.