“File and Suspend” Strategy is Soon to Expire

If you’re married and have reached full retirement age, now may be the time to file for Social Security benefits. As of April 30 a popular filing strategy for married couples will be going away. The “file and suspend” strategy was a loophole that allowed married couples to claim more Social Security benefits over their lifetimes. 

 social security benefits

First one member of the couple (usually the higher earner) would file for benefits at full retirement age and immediately suspend them.

Then, the other member of the couple would file for a spousal benefit and suspend his or her own retirement benefits. This would allow the couple to have some monthly income from Social Security while both of their retirement benefits continued to grow at 8% a year until age 70, which could eventually raise their payments by as much as 32%. 

Under the new law, spouses will no longer be able to receive spousal benefits if the other spouse has suspended their benefits. Also the ability to qualify for spousal benefits while waiting to collect your own is going away.

Under the rules anyone filing for spousal benefits will also be filing for their own benefits and will receive only the higher amount of the two. Spouses will not be able to receive delayed retirement credits if they file for for spousal benefits. 

All of this sounds confusing and the Social Security administration has only made things worse by not posting the new claiming rules online until late last month. Now the deadline is coming soon and seniors who are not grandfathered in under the old rules will have to act quickly or face losing out on a strategy that could increase their lifetime benefits. 

Fortunately this filing strategy isn’t going away for everyone. Seniors who have already reached full retirement will be grandfathered into the old rules, although determining who qualifies can be difficult.

Generally, those who will not be affected by the rule changes fall into one of three groups:

Anyone who has already claimed benefits before April 30. If you submit your request by that date, and your spouse or children become entitled to benefits either before or after that date, they will not be cut off by the new rules and will continue to receive payments.
Anyone who will reach full retirement age (66 right now) on or before April 29 will continue to be able to use the file-and-suspend strategy.
Anyone who was age 62 or older as January 1, 2016 will be able to continue to file a restricted application at FRA for just their spousal benefit, while deferring their own retirement benefit. They will not be subject to the agency’s new deeming rules.

These changes to Social Security benefits are significant, but the good news is that some people are still be able to take advantage of the “file and suspend” strategy.  If you are not grandfathered in under the old rules and want to file using this benefits boosting strategy, then the time to act is now.


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