No More File and Suspend

Grandparents And Granddaughter Walking On Winter BeachIf you’re like most people planning for retirement, you look for ways to maximize your fixed income as much as possible. In the past, many retired couples took advantage of a loophole in Social Security regulations that allowed them to claim an average of $60,000 more in benefits over their lifetimes.

Called “file and suspend”, the strategy allowed the higher-earning spouse to file for benefits at full retirement age, but then suspend payments for a few years. With payments suspended, the recipient could continue to accumulate work credits and allow their eventual benefits checks to grow by about 7 percent per year.

Meanwhile, the lower-earning spouse could apply for spousal benefits. He or she would begin receiving these checks each month, at about half of their spouse’s scheduled benefit amount. The file-and-suspend strategy worked well to allow many couples to begin claiming some benefits in the present, while earning a larger benefit check later. When the higher-earning spouse eventually passed away, assuming they did so first, the lower-earning spouse could then convert to survivor benefits at the higher rate.

Now here’s the bad news. If file and suspend was a part of your plan for retirement, you might need to come up with a new plan to maximize your income. Congress recently placed the “file and suspend” rule on the chopping block, and most couples will no longer be able to take advantage of it.

The bill was signed into law on November 2, so many couples could be faced with new choices regarding Social Security benefits.  If you were planning on (or using) the file and suspend strategy, you’ll likely have to make different arrangements.

For more information on Social Security, or for help with making a new plan for your retirement income, call our office to schedule an appointment. We can answer your questions, assess your financial future, and help you come up with a new plan for a stable income in the future.

This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency

15055 – 2015/11/16