For many retired couples, the “file and suspend” strategy worked wonders with their Social Security benefits. Under the old rules, the higher-earning spouse could file for benefits at full retirement age, then suspend the payments until a later date. This allowed him or her to continue working toward a larger Social Security benefit check in the inevitable future. Meanwhile, the lower-earning spouse would file for spousal benefits and start collecting checks.
This method helped many couples prepare for a more stable retirement in two ways: The higher-earning spouse continued to work and accumulate work credits, and eventually claim a larger benefit check, while the other spouse was eligible to go ahead and collect benefits at about 50 percent of their spouse’s suspended benefits. This money could provide a much-needed cushion to prepare for retirement. Some couples even invested the extra money and entered retirement on better retirement income. Many couples reaped an extra $60,000, on average, by utilizing the file-and-suspend strategy.
Now, all of that is now set to change. As of last Friday, Congress has passed a bill which eliminates the old file-and-suspend strategy. Many couples whose retirement income plans depended upon this strategy will need to find another way to cover living expenses as they prepare for, or enter, retirement.
However, there is one caveat: If you or your spouse are set to turn 66 in the next six months, you might still be able to take advantage of this strategy. The new rules don’t take effect for six months (from the time President Obama signs the new law), so couples can still utilize file-and-suspend during that time if they are eligible to do so.
Of course, file and suspend is not right for everyone. Just because time is running out, don’t rush to file and suspend your Social Security benefits! Yes, some couples may miss out on an important retirement income strategy. But for some others, this new rule won’t make a difference, because it wouldn’t have been right for them anyway.
Before rushing to make a decision, call our office for an appointment. We can review your retirement income plan and assess your financial situation, and help you make the decision that is truly right for you. Call Mercedes directly at 760/436-1711.
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.
15052 – 2015/11/16