File and Suspend

As part of the last deal to keep the government running, a change was made in the social security system.  A very popular strategy called “File and Suspend” was changed so that many of us will no longer be eligible for the benefit.  The rules for filing a restricted application were also changed.

There are three benefits available to each of us under the social security system.  These are: the workers benefit, the spousal benefit and the survivor benefit.

The workers benefit is based on your work history.  You know it as your social security benefit found on your social security statement.

The definition of the spousal benefit is collecting a social security benefit based on your spouse’s earnings history, not yours.  When you collect under the spousal benefit, your workers benefit continues to grow until age 70.

Under the old rules, you could start collecting the spousal benefit at age 62.  You could switch between the spousal benefit and your workers benefit once between age 62 to age 70

The survivor benefit is the larger of your workers benefit and your spouse’s workers benefit.  At the death of one spouse, the surviving spouse will receive the larger of the two benefits.

File and Suspend

In order for you to collect your spousal benefit, your spouse must be at least 66 years old and file to collect social security. That’s the file part.  The suspend part of the strategy meant that your spouse didn’t start collecting their benefit but just activated their account.

Then you would file a restricted application which would allow you to collect your spousal benefit.  You could start collecting your spousal benefit at age 62 but your spouse had to be at least 66 for you to collect.

The change is as follows:  You can only file and collect the spousal benefit if your spouse has filed and is collecting their social security benefit. This means your spouse cannot suspend their benefit.  Also, you must achieve full retirement age to file a restricted application, which means you cannot start collecting the spousal benefit until at least age 66 or higher. 

We are actively reviewing our clients’ situations to determine if there is any action that needs to be taken before this change is fully implemented.  If you need to do something, we will contact you.

Don’t be surprised if there are more changes to the social security system in the future.

If you would like to discuss how changes to the social security system may affect you, give our office a call at 215-968-1755.