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A little known Social Security perk for married couples creeping up on retirement age will run out at the end of the month.
Since 2000, a financial strategy known as “File and Suspend” has added thousands of dollars of Social Security benefits in couples’ pockets.
The perk, however, was nixed in last year’s Bipartisan Budget Act of 2015. And come April 30, the option disappears.
“File and Suspend” allows a Social Security recipient to collect spousal benefits while his own continues to grow at approximately 8 percent per year, according to Alex Sutherland, a registered investment advisor with LifePlan Group. To qualify, you must be 66 or older and submit a request to the Social Security Administration before the month’s end.
“Recently, at my firm, we met with a husband and wife, both age 66, who were planning on waiting to election their Social Security at age 70,” Sutherland explained. “They wanted to take advantage of letting their benefit defer and grow. Each year you delay, your benefits grow by approximately 8 percent. Each of their benefits would be approximately $2,800 per month at age 70.”
By applying for the “File and Suspend” strategy, Sutherland said, the couple was able to defer their benefits until age 70, while continuing to collect spousal benefits of approximately $1,000 monthly in the meantime.
“That’s an extra $12,000 per year for four years,” he said. “They will still each collect approximately $2,800 per month age age 70.”
Had the couple missed the “File and Suspend” strategy, Sutherland said they would have been out $48,000 of additional income from Social Security.
“Usually it’s only wealthier people who know about this strategy because they have financial advisors to help keep an eye on their money,” Sutherland said. “It can be a potentially large sum of money if left on the table.”
To apply, couples must be at least 66 – full retirement age – by April 29.
“You can’t do it after age 70,” Sutherland advised.
If only one spouse paid into Social Security, he or she can draw off the other spouse’s benefit records, he said. And the amount accrued will vary depending on each person’s Social Security benefits.
“Social Security is a real benefit a lot of folks think about delaying because it does grow 8 percent annually,” Sutherland said. “This strategy helps them collect some Social Security while allowing their own to continue to grow in amount. It’s a great strategy, but after April 30, it’s over. If you are in that age group, you really should look into it.”
To apply online, visit ww.ssa.gov/retireonline. Sutherland said the entire process takes about 15 minutes to complete. •
