Because of a shortage in savings, investments, and alternative retirement sources, Social Security benefits are the main source of income for millions of Americans during retirement. For those already receiving Social Security benefits, their monthly Social Security benefits are considered their property. They are a right they can confidently expect and receive.
For those who have not yet filed, the amount and timing of when they will receive Social Security benefits in the future is not guaranteed until the date that they actually file for Social Security benefits. This is because the current laws can change.
For example, in 2010, the Social Security Administration reported that its Board of Trustees projected that by 2035 it would only be able to pay for 75 percent of scheduled Social Security benefits (Gross, 2010). However, it acknowledged that “adjustments to taxes or benefits… may restore solvency for the Social Security Program on a sustainable basis…” and that trust fund assets can “just be replaced with public debt.” (Gross, 2010)
But What If I Run Out?
Still, many people are concerned about running out of money during retirement, and Social Security benefits are a significant source of retirement income (Dushi et al., 2017). If you delay filing for Social Security retirement benefits, your Social Security benefits increase for each month you delay receiving retirement benefits. This occurs until the full-retirement age of 70. People who file for benefits before full retirement age receive a reduced monthly benefit.
Because individuals and families have different financial needs, the Social Security Administration does not tell everyone about the ‘best age” to start receiving retirement benefits. It is, ultimately, your choice on when to file (SSA Publication No. 10147, 2022). However, married couples have Social Security options (Vanguard, 2022, Fidelity, 2022). One option was “File and Suspend.”
What Is File and Suspend?
File and suspend was a strategy that allowed married couples of full retirement age to maximize their Social Security benefits. This is how it used to work:
Usually, the higher-earning spouse, who reached full retirement age, would file for Social Security benefits and then voluntarily suspend the payment of his or her retirement benefits. This voluntary suspension allowed spousal benefits to be paid to the lower-earning spouse while the higher-earning spouse was not collecting retirement benefits. After finally restating benefits, the higher-earning spouse would then receive an increased benefit for every month his or her benefits were suspended (SSA 2022). Because of the Bipartisan Budget Act of 2015, this strategy ended for people who turn 62 on or after January 2, 2016 (SSA 2022).
A New Strategy
Now that this strategy has ended, people can resort to a different but similar strategy using traditional filing techniques as follows:
The eligible lower-earning spouses can choose to file as soon as possible. This allows the lower-earning spouse to start receiving a reduced benefit while the higher-earning spouse delays the receipt of benefits. By doing this, the higher-earning spouse can receive delayed retirement credits by postponing the receipt of benefits. At any time, the higher-earning spouse can still file and then voluntarily suspend benefits and receive higher future benefits for delaying (Social Security, 2022).
However, during a voluntary suspension, the lower-earning spouse cannot receive additional spousal-related benefits based on the higher-earning spouse’s record. Remember, the benefit increases stop for the higher-earnings spouse at age 70. So, the higher-earnings spouse can elect to receive his or her maximized monthly benefits at age 70.
Also, remember that when the higher-earnings spouse elects to start or restart benefits, it is important to verify if the lower-earnings spouse may be eligible to receive an increased spousal monthly benefit.