Q: My husband and I are interested in using the "file and suspend" strategy that you have written about in the past. Can you explain more about exactly how and when we should use this rule, and how it might affect other benefits we're entitled to?
A: The first thing to know about file and suspend is that it only applies to the retirement benefit of the person who is taking the action. You can’t file and suspend for a spousal benefit or a survivor’s benefit.
If you’ve begun taking your retirement benefit before full retirement age (FRA), which is 66 for people now approaching retirement, you cannot suspend this benefit until you’ve reached FRA. After that date, you will only suspend—you wouldn’t need to file and suspend, because you’ve already filed.
Once you’ve suspended your retirement benefit, it will begin earning delayed retirement credits (DRCs) at the rate of 8% a year. That’s 8% of the benefit you were receiving at the time you suspended it.
The primary reason to file and suspend is to allow your spouse to file a spousal benefit based on your earnings record. It’s not possible to file for a spousal benefit unless your spouse has already filed for his or her own retirement benefit. By filing and suspending, you can make your partner eligible to take a spousal benefit while allowing your own retirement benefit to increase because of DRCs.
A person eligible for a spousal benefit who waits until FRA to take it does not need to file and suspend. All they need to do is file what’s called a “restricted” application only for their spousal benefit. Their own retirement benefit will grow through DRCs. They should inform Social Security when they wish to switch to their higher retirement benefit.
If you have begun receiving retirement benefits before your FRA, and you decide at or after your FRA to suspend them, you do not have to repay Social Security any of the benefits you’ve already received. This should be easy to do with just a call to the agency’s toll-free number: 1-800-772-1213 (TTY 1-800-325-0778). Ask for written confirmation that your request has been approved and acted upon.
Suspending your retirement benefits will allow them to grow when you resume them. But if your spouse is already collecting a spousal benefit based on your earnings record, that benefit will not increase. Spousal benefits are not based on your actual retirement benefits. Instead, they are keyed to the retirement benefit you were or would be entitled to at your FRA – whether or not you had actually filed for the benefit at that time.
If you file for your retirement benefits after you’ve already reached your FRA, you may be eligible for a lump-sum payment of up to six months of benefits, but only as far back as your FRA date. However, you cannot file and suspend at, for instance, age 66 and a half, say you want six months of benefits, and also expect the greatest possible benefit at age 70. What you might do is file for your benefit after FRA, say you want a retroactive lump-sum payment, and then later suspend your benefit. Your DRCs will then be based on your effective retroactive claiming date.
Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at email@example.com or @PhilMoeller on Twitter.