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Social Security Strategies: File and Suspend

(Note: This item is part one of a series on strategies for taking Social Security benefits. For other posts in the series, see the link at the bottom of the item.)

Tiya Lim, one of my colleagues at Buckingham Asset Management, has done some wonderful research on strategies regarding your Social Security benefits. Over the next two posts, I want to share some of the strategies that may help you get more out of your Social Security benefits. The strategy we'll discuss today -- called "file and suspend" -- applies to married couples.

Consider the following example. John is the higher earning spouse, and John's wife Mary is the lower earning spouse. When John reaches full retirement age, he files for Social Security benefits and immediately suspends them. This can be done from the remarks section of the application.

Because John has filed for benefits, Mary can choose the higher of her spousal benefit or her regular benefit. John can continue to work or draw income from his IRA, then begin receiving his benefits at a later date. This allows him to not only earn more if he continues to work, but also to draw a larger benefit.

There are several potential advantages to this strategy:

  • The higher earning spouse can delay benefits and receive up to a 32 percent higher benefit.
  • The lower earning spouse can receive the spousal benefit before the higher earning spouse begins taking claims.
  • The lower earning spouse could also receive a larger survivor benefit.
  • By taking withdrawals from an IRA, you may reduce the mandatory distributions you would face at age 70 1/2.
As with any strategy such as this, you should consider several outside factors as well -- such as the health of both spouses and if there is an immediate need to start taking Social Security benefits. You should also contact the Social Security Administration to find out your estimated benefits, then an advisor to see if this strategy makes sense for you.

For further reading on Social Security, see the following posts:

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