You can thank a law passed in November for blocking a threatened 50% premium hike for many Medicare recipients this year. Unfortunately, you can blame that same law for eliminating techniques you can use, if married, to boost your Social Security benefits—moves potentially worth tens of thousands of dollars.
Before the law completely takes effect, however, you and your spouse might still have access to some rewarding courses of action for claiming Social Security. Here’s what you need to know.
Are you 66? Step on it
Disappearing soon is Social Security’s “file and suspend” option, which lets you, if you’re 66 years old, file for retirement benefits and then delay taking payments. The payoff: Your spouse (and possibly other family members) can collect money based on your record while your own eventual monthly payment grows at the rate of 8% a year until you turn 70.
In many cases, this can be a great way for you and your spouse to get income early in retirement while maxing out what you or your widow will receive later. But you have only until April 29 to file and suspend. After that, if you suspend your benefit, no one will be able to collect benefits based on your record. And you won’t be able to collect on someone else’s.
Another reason, if you’re at least 66, to file and suspend before the end of April (or to suspend, if you’re already collecting): Currently, if you’ve halted monthly payments to get higher ones later, you can change your mind up until your 70th birthday. That is, instead of taking the high monthly payments you’ve earned, you can ask for a lump sum equal to all money you would have received had you not suspended your benefits.
That can be a big help in a financial emergency. If you are diagnosed with a serious illness, for example, you could get a pile of cash for medical costs right away rather than wait for higher monthly payments you might not be around to collect. But if you suspend payments after April, you won’t have the lump-sum option later on.
Try to hold out
Also on its way out is the ability to choose the benefit you get. Right now, if you’re at least 66, you can file to collect money based on your spouse’s record but not your own, thus letting your own monthly benefit grow until you’re 70. You’ll still have that choice—but only if you turned 62 before the end of 2015. Younger than that? Once you file, you’ll get only an amount roughly equal to the greater of your retirement or spousal benefit. Bottom line: In most cases, if your own benefit could grow bigger than your spousal benefit, you’re best off waiting as long as you can to file.
Philip Moeller is co-author of Get What’s Yours: The Secrets to Maxing Out Your Social Security.