A Benefit-Boosting Social Security Strategy

douglas mcalpineAlthough “file and suspend” is no longer available as a Social Security planning tool (expired on April 30, 2016), there is one spousal strategy that still exists. A restricted application called “file as a spouse first” can be filed when you reach full retirement age (FRA) if you turned 62 by January 1, 2016 (born in 1953 or earlier). This exception applies to me who reached FRA in January of 2017 and whose spouse is already collecting benefits. I can file for the lower spousal benefit even if my own FRA benefit would be higher. In doing so, I would receive, one-half of my spouse’s benefit instead of my own benefit due to me at age 66. By deferring my full benefit, I get the maximum 8% per year increase in my benefits from 66 to 70 for a total increase of 32%. You do not get additional increases after age 70. My monthly benefit at 70 is thus maximized while I draw a lesser amount for 48 months. Whether this is a good strategy depends upon the math involved in your situation. You must calculate how much less you are getting per month for 48 months by taking the reduced benefit in return for how much more you will be getting at age 70 until your death verus your full age 66 benefit. In my case, the payback is somwhere between 30 and 48 months depending upon the final calculation of my benefits at age 70. The bet is that I will live past age 74 at which point I will get the higher amount for the rest of my life. The application process is the same as applying for your own benefits. You must set up an account with Social Security and be prepared for some questions about your credit history (None of the above is an option on all questions and can be the correct answer). Your benefit start date can go back 6 months if you are already 66 and have not filed for benefits but not before your 66th birthday. There are a few tricky steps in the online application on which we can give you guidance.

For questions regarding this or any other Social Security planning tool, please contact our office at 404-255-7400 or info@hoffmanestatelaw.com.