Congress Eliminates Popular Social Security Strategy

For many couples, retirement planning can seem like a maze of complicated decisions. Considering the complexities of the Social Security system, it is no surprise that most pre-retirees struggle with those decisions the most. Deciding when to claim your benefits is often the biggest decision you will make, and you actually have more options than you might think.

One popular strategy was known as file-and-suspend.  You might already know that by waiting beyond full retirement age to claim Social Security benefits, you can earn a higher monthly check. But what if you and your spouse could use some extra income now? File-and-suspend was a great solution.

To utilize the file-and-suspend strategy, you both must have reached full retirement age (65 to 67, depending upon your years of birth). The higher-earning spouse files for benefits, but then suspends payments until a later date (for example, age 70). Now that spouse can continue to accumulate work credits, and earn a higher check later.

Meanwhile, the lower-earning spouse can file for spousal benefits. He or she will receive a check for half of the higher-earning spouse’s benefit amount. This gives you both some extra income as you prepare for full retirement of the higher-earning spouse.

When the higher-earning spouse does claim his or her benefits, monthly checks will be larger than they would have been at full retirement age. At that point, the lower-earning spouse can convert to his or her individual benefits, which in many cases will result in a larger check.

Upon the death of the higher-earning spouse, the other spouse can even convert to survivor benefits, at which point he or she will receive 100 percent of the deceased spouse’s scheduled benefits. This makes the file-and-suspend strategy ideal for couples who worry about a lower-earning spouse being left behind with inadequate Social Security benefits.

But there’s just one problem –  On November 2, Congress reached a budget deal that axed the file-and-suspend strategy.

The law won’t take effect for six months, so couples who have reached, or will reach, full retirement age during that time can still take advantage of the old rules.  But of course, you would have to make that decision soon, while you still have time.

The bottom line is this…

Each couple’s situation is different and there are dozens of different ways to claim your Social Security benefits.  Add to this the fact that rules can change on a moment’s notice and it makes sense for you to counsel with an experienced retirement planner before making a decision.  Remember, that once you begin collecting benefits it can be very difficult to change anything, so making the right decision the first time is imperative.

Call our office at to schedule an appointment, and we can help you decide which strategy is best for you.

This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency

15036 – 2015/11/16