The Washington PostDemocracy Dies in Darkness

This lucrative Social Security strategy is about to go away

(Bradley C. Bower/AP)
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Married couples have about a week to take advantage of a lucrative Social Security strategy that will be gone by the end of the month.

The filing strategy, known as file-and-suspend, could increase lifetime retirement benefits for some high-earning couples by as much as $60,000. The approach allows one spouse — typically the higher earner — to file for benefits and then suspend the payments. That makes it possible for their husband or wife to begin receiving spousal benefits while waiting for their own Social Security benefits to grow as much as possible. (Social Security retirement benefits are increased by about 8 percent for every year a person waits beyond their full retirement age — until age 70.)

Not everyone can use this strategy, however. And some people who qualify may find it’s not a good fit for them, so couples should do their research before they act, says Laurence Kotlikoff, a professor at Boston University and co-author of “Get What’s Yours: The Secrets to Maxing Out Your Social Security.”  

To qualify, one spouse needs to be at least 66 years old in order to file and suspend retirement benefits by April 29. They can do that by visiting their local Social Security office, but it may be difficult to book an appointment in time given the short time-frame, says Kotlikoff. Some people may have luck if they just show up to their local office, he says. They can also apply to file and suspend their benefits online, but they would need to specify clearly in the application that they want to file and suspend their benefits on the same day, says Kotlikoff, who is releasing an updated version of his book next month.

That covers the person planning to file and suspend benefits. But the significant others who want to collect spousal benefits before they collect their own Social Security benefits also need to be aware of a few key rules.

For starters, only people who were at least 62 years old as of last year will still have the option of collecting spousal benefits before switching to their own benefits later on. And they will have to wait until they are at least 66 before they can collect their spousal benefits using that strategy.

The clock is ticking thanks to a decision Congress made last year to eliminate the strategy as part of a budget bill. While the strategy was legal, it was viewed by some critics as a loophole because it provided an advantage to married couples by allowing them to collect some cash while their own retirement benefits grew.

After the law goes into effect next week, most married people will only be able to claim either their own benefits or their spousal benefits, not one and then the other. And people will only be able to claim spousal benefits if their husband or wife is already collecting retirement benefits. Widows won’t be affected by the new rules. Neither will people who are already receiving benefits under this approach.

Read more:

What you need to know about the lucrative Social Security strategy that’s going away

Five of the most important facts everyone gets wrong about Social Security

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