If you are married, and you or your spouse will soon be 66 years old, you might be able to increase your Social Security by thousands of dollars, but there’s a catch: A popular strategy known as “file and suspend” will be shut down for new participants after April 29. As people rush to file paperwork before the doors close, Social Security’s field agents are so confused by the process they are mistakenly turning people away who should be eligible. The strategy has been a favorite among savvy financial planners for clients near or in retirement because it increases retirement income significantly for couples. For affluent people, the strategy can mean about $60,000 in extra Social Security, said Laurence Kotlikoff, a Boston University economics professor and president of MaximizingMySocialSecurity.com. The offices are attempting to implement changes that were incorporated in the Bipartisan Budget Act of 2015 after file and suspend was criticized as a benefit for the rich. Under file and suspend, when a person in a marriage turns 66, he or she can claim Social Security but then ask to hold off on getting paid benefits. It’s usually a husband. The reason: By taking the official action of claiming the benefits, he sets in motion a rule in which his spouse can then claim what are known as “spousal benefits.” Those benefits are a portion of what the husband would receive based on his own working years.
The spouse can claim spousal benefits at age 66 as long as he or she was at least age 62 on Jan. 1, 2016, and the couple starts the process with file and suspend and a “restricted application” before the deadline runs out. A common mistake in Social Security offices has been to tell couples that a spouse can’t get the spousal benefits under file and suspend unless someone is 66 on April 29. Yet, while the person suspending Social Security must be 66, the spouse can be 62 as they start the process. To qualify, the spouse should have been born in 1953 or earlier, Settle said. Anyone who used the file and suspend practice previously, or gets in under the wire by April 29, can keep making use of the provision.
Source/more: Seattle Times
Related: “Who May Still Exercise ‘Claim and Suspend’ in the Aftermath of the Bipartisan Budget Act of 2015?” by Avram L. Sacks, Esq. (NAELA News Online)