File and Suspend: Changes to Social Security May Affect Retirement Planning

In the fall of 2015, Congress voted down the Social Security strategies known as “file and suspend” and “restricted filing” which were collectively called “claim now, claim more later.” These practices allowed couples to increase their benefits by thousands of dollars. However, because of the Bipartisan Budget Act of 2015, spousal benefits could cost Americans millions of dollars.

File and Suspend

 File and suspend was a strategy utilized by married couples about to retire. One spouse would apply for Social Security upon retirement and then ask to suspend their benefits. The other spouse would then be eligible for a spousal benefit, which is half the normal benefit. While this process is happening, the spouse with suspended benefits would watch their Social Security benefit increase at 8% each year until the spouse turned 70.

However, now due to the changes enacted in Congress, spousal benefits may only be received when the spouse whose financial record is being used for the application is currently receiving their own benefit.