Q: I am 68 years old and retired. My wife is 60 and still working. When I was 66, my financial planner advised me to “file and suspend” so that when my wife turns 62, she can claim spousal benefits on my record and let her own continue to grow until she is 70. We are trying to maximize our Social Security. But now I’m wondering if I did the right thing. Can you explain the rules to me?
Q: I am about to turn 66. I’m still working. My 64-year-old wife has been getting her own Social Security since she was 62. Can I file and suspend so that I can claim benefits on my wife’s record now and maximize my own retirement at age 70?
Q: I see you recently wrote yet another column about Social Security maximizing strategies. I’m going to ask that you please stop doing that. There are so many other important Social Security issues that we need to know about. We DO NOT need to learn any more about the sneaky ways that greedy and selfish geezers can use to claim unintended benefits out of an already financially strained system.
Q: Please, please, please: No more columns about maximizing one’s Social Security. These so-called “strategies” don’t apply to most of us and we just don’t care to read about them!
These four recent emails I received illustrate something I’ve learned over the past several years. My readers can be put into two different camps. One group would like me to use each and every column I write to explain Social Security maximizing strategies. The other camp would just as soon I never broach the topic again.
So what is a Social Security columnist to do? To paraphrase Abe Lincoln: “I can please some of my readers all of the time and all of my readers some of the time. But I can’t please all of my readers all of the time!”
Actually, I went back and checked. Out of the 52 columns I’ve written over the past year, 11 have been about maximizing strategies. So that means I’ve covered at least 41 other Social Security topics over the past year. (In many columns, I discuss more than one subject.) But there is no question that maximizing is by far the most frequently discussed issue I’ve written about. And that’s primarily because there has been so darn much misinformation spread (mostly on the internet) about the topic.
And the first two emails illustrate this point. So for the 12th time in now the last 53 weeks, I’m going to once again discuss this controversial topic. (And I hope the readers in the “no more” camp will forgive me!)
For most of the history of the Social Security program, the only strategy you really needed to consider was this: Should you take reduced benefits at 62 (or some other early age) or wait until your full retirement age (currently 66) to claim full retirement benefits?
Then in 1972, Congress introduced another strategy: the idea of delayed retirement credits. The rules have changed over the years, but the law currently says you get a two-thirds of 1 percent credit added to your Social Security check for each month you delay filing for benefits after age 66. That comes out to an 8 percent bonus per year or a 32 percent bonus if you wait until age 70 (the maximum age) to file.
Then in the 1990s, the Social Security law that allowed working seniors to claim full benefits at age 66 (the prior age was 72) included some totally unintended provisions that allowed seniors to “maximize” their benefits. One of those provisions came to be called “file and suspend.” This strategy was usually employed by a husband who wanted to wait until age 70 to claim the full 32 percent bonus. But he could file for benefits at 66 and immediately suspend his own benefits, but allow his nonworking wife to take spousal benefits on his record when she came of age. This strategy was actually eliminated last year. But the phrase “file and suspend” lives on — mostly on the internet.
People are always asking me if they can “file and suspend.” But what they really mean to ask me is if they can “file and restrict.” That is a completely different strategy that is also pegged for elimination. But it’s still good for another couple years. Anyone turning 66 before Jan. 2, 2020, can employ that strategy.
The “file and restrict” strategy allows one member of a married couple to claim dependent husband’s or wife’s benefits on the other spouse’s record at age 66 while letting his or her own retirement benefits grow — usually until age 70.
So, for example, the second email I mentioned at the beginning of this column involved a 66-year-old man who has a 64-year-old wife who is already getting her own retirement benefits. He asked if he can “file and suspend.” That’s the wrong phrase and the wrong strategy. But what he can do is “file and restrict.” That means he can collect 50 percent of his wife’s age 66 retirement benefit until he is 70 years old. At that point, he can switch to 132 percent of his own.
The gentleman who wrote the first email used in this column was advised to “file and suspend” when he turned 66. There actually was no real need for him to do that since his wife was not (and still is not) eligible for any benefits on his record. And even if she were old enough, she could not do what he was told she could do. She would not have been able to file for spousal benefits at 62 and save her own until age 70. And because she turns 66 after the Jan. 2, 2020, deadline mentioned earlier, she cannot use the file and restrict strategy. This couple should forget about all this maximizing hoopla. The wife simply has to decide when she wants her own benefits to start.
I just very briefly outlined some very complicated Social Security rules in this column. If you want to know more about the topic, send an email to thomas.margenau@comcast.net and ask me to send you a fact sheet I wrote called “When to take your Social Security benefits.”
