November 17, 2015
There is a budget deal moving quickly through Congress that would put an end to a monetarily successful strategy for couples known as “file-and-suspend”. This strategy is a loop-hole of sorts that can boost lifetime Social Security retirement benefits by hundreds of thousands of dollars.
The tactic is executed when the higher-earning spouse files for Social Security benefits at their full retirement age and immediately suspends the filing while the benefit grows until as late as 70. The lower-earning spouse is then able to collect spousal benefits at their full retirement age, and later move to their own full benefit if it is larger.
This costs roughly $9.5 billion in annual benefit costs to the program according the Center for Retirement Research. This deal approved by the House this week would tighten up on the practice for individuals turning 62 after calendar year 2015. However, the deal will not truly go into effect until 180 days after the signing of the bill, which allows six more months for couples to file-and-suspend if they choose to do so.
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