Would you like to maximize the Social Security benefits your spouse gets at the same time you maximize the benefits you will receive? The answer is most likely yes!
You may be able to using a Social Security procedure known as "file and
suspend" If you are married and have reached your full retirement age (FRA), you can simultaneously file for Social
Security, then request that your benefits be suspended until you reach age
70. After you have suspended benefits, then your spouse could apply to begin receiving Social
Security benefits based upon your earnings record.
In some instances where one spouse has not worked for pay, or earned
considerably less income than the other, the benefit the spouse would receive
could be higher than the benefit the spouse would receive under his or her own
work record.
Here is an example of how "file and suspend" works. Let's assume Stan and his wife Julia have both reached age 66. He is eligible for a monthly $2,000
benefit, while Julia, if she were to file for Social Security, would get $500 a
month based on her work record. Henry decides to invoke his file-and-suspend option. At the same time or shortly thereafter, Julia
can file to receive her spousal benefits based on Henry's earnings. Those benefits will be $1,000, 50% of what Henry was eligible to receive at
66. In other words, because Henry has taken the file-and-suspend option Julia's
benefits immediately jump by $500 a month.
If you reach your full retirement age and delay collecting your benefits
until age 70, your eventual benefit will grow by 8% each year between ages 66
and 70 according to the social security administration.
Under this scenario, when Henry finally starts collecting his benefits at age
70, he would find that his monthly check would be $2,640, not the $2,000 he
would have received at age 66.
Although filing for Social Security and then suspending payments can be
financially beneficial, it won't increase benefits for all couples. The file and suspend option isn't helpful when one spouse worked for the Federal or state government and is receiving a pension.
It won't work in instances where two spouses earned similar
amounts over their careers. If the husband files-and-suspends his spouse would
get 50% of his benefits—but that 50% would yield a monthly check that would be
lower than the one she would be eligible for under her own earnings record.
Also, obviously, you should consider your health before deciding to postpone
your Social Security benefits. If you are in good health and have a history of longevity in your family, this may be a great option. Conversely, if you are not in good health and/or need the cash flow, file and suspend may not be the
best strategy.
File and suspend involves delaying full benefits so you need to have access to funds to be able to make up the difference you would have received if you were collecting full benefits at FRA.
If you are about to turn 66 keep in mind that you don't have to rush
to make a decision about file and suspend immediately. You can use that option
later. Conversely, if you have invoked your file and suspend option, but then find
you do need your Social Security check before you turn 70, you can immediately
reinstate getting your benefits.
Information on file and suspend may be found at the link below:
http://www.ssa.gov/retire2/suspend.htm
