From the Palm Beach Research Group team: The strategy is called “file and suspend.” Using it, you could end up with a lot more Social Security cash.
Here’s how it works:
Francine and George are a married couple. Francine files for Social Security at 66. This is the full retirement age, or “FRA.” At the same time, George claims his spousal benefit. But Francine asks for her payments to be suspended until she’s 70.
Her benefits grow, while George collects his spousal $750 per month.
By waiting until she’s 70, Francine’s benefit increases to $1,980 per month. So George and Francine’s combined monthly income becomes $2,730. And if they both live to age 90, the “file and suspend” strategy will bring them almost $50,000 in additional income. (As you can see below, the lines cross at age 82.)
In another example of the “file and suspend” tactic, James and Tiffany are both 62. They’ve decided that the top earner (James) will wait until age 70 to file. But Tiffany files as early as possible—at age 62—for her own benefit. (She can’t claim her spousal benefit until James files.)
At age 66, James uses the “file and suspend” approach. This allows Tiffany to switch over to her spousal benefit. Because James has made a lot more money than Tiffany, her spousal benefit (50% of James’ Social Security income) will be much larger than her own.
Meanwhile, James’ benefit continues to grow until he reaches age 70.
Remember: You can only “file and suspend” if you have reached your FRA. To learn more, view the Social Security Administration’s explanation, right here.
The Quick Takeaway: The spouse with the higher benefits defers receiving Social Security payments as long as possible, while the other spouse claims his or her spousal benefit any time after age 62.Who Should Use It: Couples who don’t have to tap into their Social Security right away.The Main Benefit: You maximize the larger of your two Social Security payments, yet still enjoy some spousal benefit cash flow.
Reeves’ Note: Last week, we issued our popular special report on how to “opt out of Obamacare.” This week, we sent out another blockbuster: “Social Security: How to Maximize Your Benefits.” It demystifies the 560 ways to claim Social Security… and a staggering 2,728 rules governing your benefits. All paid subscribers can click here to access the full report, for free.