IMPORTANT DEADLINE – April 29, 2016: Last Chance to Use the “File and Suspend” Strategy for Claiming Social Security Benefits


The April 29, 2016 Deadline is Approaching
Time is running out to use a potentially very lucrative Social Security benefits-claiming strategy. Spouses will no longer be able to use the “File and Suspend” strategy after April 29, 2016. Beware, however, that the new rules are causing confusion at some Social Security offices.

What is the “File and Suspend” Strategy?
The federal budget agreement that was signed in the fall of 2015 ended two Social Security strategies that some spouses have used to maximize benefits. The first, the “File and Suspend” strategy, allowed a worker to file for benefits and then suspend them. The worker’s spouse or children could then begin to receive spousal or children’s benefits while the worker postponed receiving benefits and continued to earn retirement credits.

The New Law
Under the new law, which takes effect on April 29, 2016, a spouse cannot begin receiving benefits until the worker is actually receiving benefits too. Workers can still “file and suspend,” but spouses (or other dependents, including minor and disabled children) cannot receive benefits during the suspension. There is an exception for divorced spouses. A divorced spouse can continue to receive spousal benefits if the worker suspends benefits.

What is the “Claim Now, Claim More Later” Strategy?
The second strategy, “Claim Now, Claim More Later,” allowed a spouse, at full retirement age, to choose whether to take spousal benefits or benefits on his or her own record. Under the new law, if you were not 62-years old by January 2, 2016, you do not get to choose which benefit to take. You may take whichever benefit is higher, but you cannot take spousal benefits and then switch to your own record later.

Things to Consider
If you are 66-years old or older before April 29, 2016, you should immediately consider whether or not you want to “file and suspend” your Social Security benefits. If you do not “file and suspend” before April 29, 2016, your spouse will not be able to collect spousal benefits, unless you are also receiving benefits. “File and Suspend” can be a beneficial strategy for certain couples.

File and Suspend Example
For example, suppose a husband is 66-years old and his wife is 65-years old. The husband can “file and suspend” before April 29, 2016.
Because the wife was 62-years old or older on January 2, 2016, when she turns 66-years old, she can choose to take her spousal benefit while her own benefit continues to accrue. Meanwhile, the husband continues to work, so his benefit is also growing.

If you do decide to “file and suspend” before the deadline, beware that some Social Security offices are giving out incorrect information about using the “File and Suspend” strategy before the new law takes effect, claiming that a worker can only “file and suspend” if his or her spouse is also 66-years old. If you run into trouble with a Social Security office, you may need to be persistent in order to obtain the correct information.