Social Security-The End of the File and Suspend Couples Strategy
Roger Wohlner
Freelance Financial and Business Writer, Ghostwriter for Financial Advisors, Finance Blogger, Fee-Only Financial Advisor
The big news in the world of retirement planning is end of a lucrative couples Social Security claiming strategy, file and suspend with a restricted application. The ability take advantage of this lucrative option comes to an end as of April 30, 2016 thanks the passage of the Bipartisan Budget Bill of 2015.
What is the file and suspend strategy?
Under this strategy spouse A upon reaching their full retirement age (FRA) would file for their benefit and then suspend it. They would accrue delayed credits at 8% per year out to age 70 (or sooner) at which time they would resume taking their benefit.
Once spouse B reached their FRA they would then file a restricted application for benefits in order to receive a spousal benefit based upon spouse A’s earnings record. Their own benefit would continue to accrue out until age 70 at which time they would switch to their own benefit if it was higher than the spousal benefit or continue to take the spousal benefit if it was larger.
In many cases this might add an additional $60,000 in benefits to the couple over the four years between spouse B’s FRA and age 70.
There are numerous reasons to do this and it has become a popular couples claiming strategy in recent years.
This option ends as of April 30, 2016.
Financial Author & Founder of JoeTaxpayer.com
8yThe option to take only a spousal benefit while letting one's own benefit grow 8%/yr is also gone. A variation of the above strategy, if the ages are right, one can take (well, could have taken) their 50% spousal benefit as their older spouse takes their own. In my case, my wife has 6 years on me. When she turned 72, and I am 66, I was planning to take the 50% spousal benefit, and wait till 70 to file my own. In effect, I will now lose the 4 years of benefits I had otherwise expected. This change of code doesn't impact just the rich, it impacts anyone who was aware of the spousal option and planned to use it.