Important Update: As of November 2, 2015, this option has been eliminated by a new budget bill passed by Congress and signed into law by President Obama. It impacts social security for married couples. Click here to read an article with the updates.
It is critical for married couples to plan together how and when they will file for Social Security. As a spouse, you are entitled to 50 percent of your working spouse’s monthly benefits. Being aware of filing options can help you choose the best strategy and may result in thousands more dollars in benefits.
File and Suspend
For one spouse to claim spousal benefits, the other must have filed for his or her own benefits. If one spouse has reached full retirement age (typically 66 to 67 years, depending on date of birth), there is an option to file and suspend – filing an application for retirement benefits, then immediately suspending the request. This enables the other spouse to file for spousal benefits, while allowing the first to defer personal benefits until age 70. Deferring allows your benefits to increase 8 percent a year, thus resulting in a larger overall benefit.
A spouse can claim spousal benefits with a restricted application at full retirement age. This allows them to receive spousal benefits without triggering a simultaneous claim for their own Social Security benefits. By doing this, they allow their own benefit to grow for up to four years, at which point they can switch to their own greater benefit at age 70.
Start, Stop, Start
Starting benefits before full retirement age reduces your benefits. If you file when you turn 62 years of age (the earliest allowed), you can suspend your benefits once you reach full retirement age. You can than resume them at any time until 70 years of age. This strategy can enable your spouse or children to collect benefits on your record sooner, while giving your own benefits the opportunity to grow.
Before taking action, be sure to evaluate how each option will affect lifetime benefits. Your financial advisor can help you assess the options, as well as take into account factors such as retirement assets or long-term care needs.