In other scenarios, the opportunity to file-and-suspend at age 66 – starting both spousal benefits activating dependent benefits as well – may be the best way to go.But in many situations, the potential dependent and spouse’s benefits are so large – even with the “maximum family benefit” limitations – that the best strategy, even in the long run, is to start benefits as early as possible (especially if the Earnings Test will not apply!If a person has filed for retirement benefits and has asked for those benefits to be suspended, he/she can later and ask to have all or some of the benefits from the date of suspension onward paid as a lump sum.
(Michael’s Note: This article was updated on November 5th at PM with updated details about the exact effective dates/deadlines and relevant birth-date requirements for file-and-suspend and restricted application.)The original version of File-And-Suspend allowed someone, upon reaching full retirement age, to file for Social Security retirement benefits, and then immediately suspend them.The fact that benefits had been filed for meant a spouse became eligible for spousal benefits (as spousal benefits be claimed until the primary worker also files for benefits)."You don't have to be rich to do this," said Andy Landis, a Seattle consultant and author of "Social Security: The Inside Story." Baby boomers, who began retiring in significant numbers this year, will want to keep this strategy in their hip pocket. The bureaucrats call it something else: "voluntary suspension of retirement benefits." It's available to anyone who's reached full retirement age.That's 66 for someone born before 1960, and 67 for everyone younger.Now I'm going to cover another technique that can maximize benefits for couples in some situations. It's called "file-and-suspend." It's ideal for couples close in age who have enough non-Social Security resources to live on for a while, or who want to continue working past their official retirement age.
It's especially handy if one spouse has earned significantly more than the other, leading to a disparity in their Social Security benefits.
And those who are full retirement age – or will reach it in the next 6 months – will still have the opportunity to file-and-suspend before the crackdown takes effect after April 29, 2016.
Furthermore, anyone who was born in 1953 or earlier (or January 1st of 1954) will still be able to do a Restricted Application for spousal (or divorced ex-spouse) benefits, even if the filing doesn’t occur until years from now.
The caveat to the approach, however, is that Social Security dependent benefits may also be available for those in their 60s who still have young children in the home – an increasingly common situation, between couples who start a family later and the rising divorce rate that has also led to a greater frequency of second marriages with young children.
And the availability of dependent’s benefits can significant diminish the benefit of delaying Social Security; while delaying does increase the individual’s benefits in the future, along with potential survivor benefits, waiting may also permanently forfeit children’s benefits that won’t be available down the road (as the children may be too old by the time the retiree reaches age 70).
However, the fact that benefits of the primary worker were subsequently suspended – and therefore were not actually received – meant that the original filer could still earn delayed retirement credit increases of 8%/year for waiting..