Nearing retirement age? You should be considering the numerous strategies available for maximizing your Social Security benefits. If you’re in a position to take advantage of these (legal and completely permitted) techniques, not doing so essentially means leaving money on the table.
One of the most potentially effective benefit-maximization techniques is called “file-and-suspend,” or “voluntary suspension of retirement benefits.” Anybody who has reached “full retirement age” (66 for some one born before 1960; 67 for anyone younger) can utilize this technique. It makes the most sense, though, for married partners who are close to each other in age and can live without Social Security benefits for some time, or who would like to keep working after their official retirement age. (And it works best if one partner has made significantly more money than the other, and therefore will receive much greater Social Security benefits.)
Here’s how it works: When the older partner reaches her full retirement age, she doesn’t file for her benefits, and either continues working or lives off non-Social Security resources. Then, when the younger partner reaches his full retirement age, the older partner files for her benefits, but suspends her actual payments (that’s where “file-and-suspend” comes from); at the same time, the younger partner claims his partner’s spousal benefit (about half the partner’s benefit). At age 70, the older partner begins taking her payments—but because she has delayed until then, the payments are substantially higher.
In this way, file-and-suspend enables married partners to ultimately receive a higher monthly Social Security benefit, while continuing to work, if they want to. The strategy only makes sense if you expect to live fairly long (because if you have health problems or the such, it’s unreasonable to delay taking payments). Not sure if file-and-suspend is right for you and your partner? Ask your financial advisor.
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