To optimize your Social Security benefit one might want to consider the possibility of the strategy known as File and Suspend. In this video we provide a more detailed overview of how this strategy works. Please speak with a financial planner and tax advisor to reaffirm the best strategy for you. Please note legislation has changed this strategy. Please view our update video titled Social Security Strategies Revisited.
Strategy 1 – File and Suspend
Who it helps: Couples with a large gap in earned income.
How it helps: This strategy allows the couple to begin their income stream at age 62, while still allowing Frank to maximize his individual benefit. It also increases Ellen's monthly benefit by $500 at her FRA, and allows her to receive the maximum survivor benefit if Frank dies first.
Note: Remember that Frank may not receive a voluntary suspension if he files prior to FRA. In a common variation of this strategy, Ellen waits until her FRA to file. This increases her monthly benefit by $150 until Frank's death.
File and Suspend
The File and Suspend Strategy allows flexibility to maximize Social Security retirement benefits, this strategy can work for both married and single filers.
For married filers upon reaching full retirement age, the Primary income earner can file for retirement benefits and then request to have payments suspended. This allows the spouse to claim the spousal benefit while the primary income earner continues to earn delayed retirement credits until reaching maximum benefits at age 70.
This strategy is flexible as it allows for a one time payout of all the suspended payments.
For Example – John files and suspends his social security retirement benefit at his full retirement age of 66, at age 68 he finds (he has a terminal illness or decides he could use a lump sum of money) he can call Social Security and make a one time request for a lump sum of all of the suspended payments that he would have received had he started collecting at age 66, Social Security will then continue sending him his age 66 monthly benefit.
John Wenzel | Archvest Wealth Advisors