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Retirement Planning > Social Security

With File-and-Suspend Dead, How to Maximize Social Security Benefits

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After several popular Social Security benefit-maximizing strategies were eliminated late in 2015, it’s become more important than ever that clients plan to make up for potential retirement income shortfalls. Fortunately, the Social Security Administration (SSA) offers an online system that can help clients adapt and adopt claiming strategies to maximize benefits under the new rules.

By using the personal earnings information provided through establishing an online account with the SSA in conjunction with the online calculators and estimations that the system offers, clients can generate a realistic picture of the role that Social Security benefits will play in their retirement income planning—along with a roadmap toward making the most of their potential future benefits.

SSA Online

Social Security’s online system allows users to create an account that can be accessed at any time, rather than waiting to receive a paper statement that is only sent once every five years (as of 2014). The online account allows clients to access their lifetime earnings history, as well as estimated benefits that will be paid depending upon whether the client claims benefits at 62, full retirement age, or age 70.  Information on survivor and disability benefits is also contained in the online statement.

These estimates all assume a relatively consistent level of earnings in future years, but online calculators can help clients account for potential changes—such as a reduction in earnings if the client cuts back on work before collecting benefits.

Clients should review their earnings information to ensure accuracy because any discrepancies must typically be corrected within three years, three months and 15 days from the end of the tax year in which the amounts were earned. In some cases, however, a tax return or other documentation of earnings can be used to correct a client’s earnings record after the initial period has expired.

File and Suspend, Post-2015

Under the previously existing rules, file and suspend allowed a spouse (typically the lower earning spouse) to begin collecting spousal benefits without jeopardizing the amount of the higher earning spouse’s retirement benefit. The higher earner would file for benefits and then make a subsequent filing to suspend these benefits, after which the other spouse would file for spousal benefits.

The strategy allowed the higher earner’s Social Security benefit to continue to grow by 8% until he or she reached age 70, when the maximum possible benefit would become available. If each spouse had reached full retirement age, the lower earning spouse also had the option of filing a restricted application, which would allow his or her own retirement benefits to continue to grow while receiving only the spousal benefits.

Unfortunately, the Bipartisan Budget Act of 2015 eliminated file and suspend for most clients beginning in 2016. If a client was born after January 1, 1954, he or she can no longer use either the file and suspend or restricted application strategies. Clients born between May 2, 1950 and January 1, 1954 lose the file and suspend option, though restricted applications remain available.  Clients born before May 1, 1950 have only until April 30, 2016 to apply for the file and suspend strategy.

The New Strategy

The recent elimination of two of the most popular Social Security maximization tools makes it crucial for clients to be aware of their estimated Social Security benefit levels—because, in many cases, those benefits will be lower than what could have been realized employing file and suspend and restricted application strategies.

In many cases, this will mean that a higher-earning spouse will only be able to maximize his or her benefit level by waiting until age 70 to collect. If both spouses have worked, however, a lower-earning spouse may wish to begin collecting benefits relatively early. The decision, of course, must be made taking the couple’s health and life expectancies into consideration (if both are in poor health, the higher earning spouse may wish to take benefits earlier than 70).

If there is a substantial difference between the earnings of the two spouses, however, it could make sense for a higher earning spouse to claim before 70. This is because the lower-earning spouse will receive a spousal benefit (in addition to his or her own benefit) that will increase his or her benefit so that it equals 50% of the higher earner’s benefit (but only once the higher earning spouse files for his or her own benefit).


Careful monitoring of a client’s finances is always important, but Social Security is one area that may be neglected by clients—many of whom are unaware that the online account system exists or have been relying on now-eliminated strategies to maximize benefits once they hit age 62.

(Check out Tax Law Changes Affecting Your Clients on ThinkAdvisor.)

Originally published on Tax Facts Onlinethe premier resource providing practical, actionable and affordable coverage of the taxation of insurance, employee benefits, small business and individuals.    

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