‘File and Suspend’ strategy to maximize social security may disappear
“File and suspend” is an advanced claiming strategy that has helped retirement savers at all income levels, especially women, maximize their social security benefits. Under the “file and suspend” strategy, one spouse files for Social Security benefits and then immediately suspends those benefits. By doing so, this spouse preserves his or her ability to receive delayed-retirement credits while also letting the other spouse claim a spousal benefit. But under the new budget deal recently passed by the Senate, it will no longer be an option beginning in early 2016.
While the Obama administration has described this filing strategy as “manipulative” and “aggressive,” arguing that high-income seniors use them to gain an unfair advantage, “file and suspend” does have its advocates, including many financial advisors, who believe that eliminating the strategy would cause more Americans to take benefits too early, lowering their Social Security payouts for life.
Most workers don’t have a pension, and many are finding out that their retirement accounts don’t provide the income stream they’d hoped for. That’s especially true for women. According to the Social Security Administration, single women over 65 depend on Social Security for over half of their income. Men in the same group only depend on Social Security for a little over a third of their income.
For those who rely on Social Security, using strategies such as “file and suspend” can mean the difference between having safe housing and reliable transportation and having to go without.
Increasing your current and survivor Social Security benefits should be top considerations when you make your claiming decisions. Those who are eligible now can take advantage of the strategy for a few more months. Minus the “file and suspend” option, be sure you carefully consider alternative ways to maximize your benefits.
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