Social Security Q&A: What’s ‘File and Suspend,’ and Should I Do It?

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This week’s question is from Gary:

My wife and I were born in 1953, so next year we both qualify for full retirement benefits. If I am still employed, will I be able to file and suspend my Social Security benefit? Can you give me an idea how this works?

A ‘good news/bad news’ situation

Gary, this is a “good news/bad news” situation for you. I’ll give you the bad news first.

Unfortunately, the file-and-suspend option that you have in mind no longer exists. It was eliminated in 2016.

Prior to 2016, many couples used the file-and-suspend option to pick up many thousands of dollars in extra Social Security benefits. Here’s an example of how the strategy worked: When you reached your full retirement age, you could file for your benefits, but suspend receipt of them. That allowed your benefits to grow at 8 percent a year up to age 70.

If that option still existed, filing and suspending would have allowed your wife to claim spousal benefits on your record while letting her own retirement benefits continue to grow. But, the option is gone. That’s the bad news.

Now the good news.

There is a similar option that is still available for those — like you and your wife — who were born prior to 1954. One of you can claim and receive retirement benefits, even prior to your full retirement age. (Suspension of benefits plays no role here.) Then, the other spouse can claim spousal benefits when he or she reaches full retirement age. The other spouse can let his or her own retirement benefits grow at 8 percent up to age 70. The spouse then claims the higher benefit.

This option is usually referred to as the “restricted application” option. It has that name because whoever is claiming spousal benefits is restricting his or her application only to spousal benefits.

Who should file?

The following question naturally arises: Should you be the one filing the restricted application, or should your wife do it? There’s no easy answer to this question. The answer depends on your relative amounts of retirement benefits and your anticipated life expectancies, among other things.

There’s a good chance that your Social Security benefits would be optimized by having your wife claim retirement benefits at 66 while you file a restricted application for spousal benefits at age 66. But that’s nothing more than an educated guess. To get the best answer as to who should claim which benefit, and when they should do it, you probably should seek professional advice.

Some financial planners understand the ins and outs of Social Security claiming issues, but many do not. Your best bet — and the least expensive one — is to use one of the internet-based Social Security advisory firms, such as my firm, which provides custom reports outlining your optimal claiming strategy for less than $30.

Finally, you raised the question about how continuing to work would affect your situation. Once you reach your full retirement age, there is no benefit penalty for continuing to earn income. So, you don’t need to be concerned about the work issue.

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About me

I hold a doctorate in economics from the University of Pennsylvania and taught economics at the University of Delaware for many years. I now do the same at Gallaudet University.

In 2009, I co-founded SocialSecurityChoices.com, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.

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Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the Social Security Administration alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.