There are two Social Security strategies for couples that have generated a great deal of interest among financial planners in recent years: file and suspend and claim now, claim more later. While these strategies can generate greater lifetime benefits for recipients, what about the Social Security system? With the system being stressed by massive boomer retirements (some estimate 10,000 per day) and a trust fund projected to run out of funds sometime in the early 2030s, how great is the impact of these creative filing strategies? Before looking at this question, lets review the two strategies.
In file and suspend, the higher-wage earner files for benefits at age 66 in order to let the lower-wage-earner spouse start collecting spousal benefits. The higher-wage earner, however, immediately suspends his or her filing in order to accrue delayed retirement credits until age 70. This odd-sounding file-and-suspend strategy allows the lower-wage earner to collect one half of the higher-wage-earner benefits and lets the higher earner commence greatly enhanced benefits at age 70. This strategy primarily benefits couples where the higher-wage earner makes much more than the lower-wage earner. If their earnings histories are similar, there is little benefit to file and suspend.
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