Social Security has been in the news lately for a number of reasons, but the most immediate involves the looming elimination of the file-and-suspend strategy at the end of April. With recent law changes set to take effect then, many people wonder if they have any remaining Social Security strategies they can use to get more benefits from the program. Although the loss of file and suspend takes away a major planning opportunity, there are still some Social Security strategies that you should know about, and be able to use if it makes sense for your situation.
How two strategies got grandfathered in
For one thing, some people will still be able to use the two strategies that lawmakers prospectively eliminated last fall. Those who file and suspend their benefits before May will still be able to use the strategy, because their spouses will still be allowed to claim spousal benefits on their work records, even when their own retirement benefits are suspended.
The other strategy addressed under the legislation has an even longer future lifespan for some Social Security participants. The strategy known as filing as a spouse first, or FAASF for short, is available to anyone who turned 62 on or before Jan. 1, 2016. Under FAASF, a spouse who has reached full retirement age can file a restricted application for spousal benefits, allowing that spouse's own retirement benefit to continue to grow. That means that, even though those who just turned 62 near the end of 2015 can't use the FAASF strategy right away, they will be allowed to do so once they reach full retirement age up to four years from now -- if they so choose.
Some other smart strategies
For many, neither file-and-suspend nor filing as a spouse first will be available. Nevertheless, there are some things you can do that will have an impact on how much you and your family receive in overall benefits.
One strategy that takes the new Social Security landscape involves a balanced approach for two-earner couples to use in taking Social Security. Under this strategy, the higher-earning spouse waits until age 70 to claim Social Security, maximizing delayed retirement credits, and making the monthly check as big as possible.
The lower-earning spouse, however, claims earlier. This allows the family to get some Social Security income early in retirement, and it also reflects the fact that it's rare for both spouses to live long enough to collect more in benefits by waiting until age 70 than by taking Social Security at an earlier age. Moreover, it works especially well if the lower-earning spouse is more likely to be the survivor of the two, because survivor benefits will then be based on the higher-earning spouse's augmented benefit.
Situations involving one-earner couples get a lot trickier under the new rules. The strategy above doesn't work for a one-earner couple because the non-working spouse isn't allowed to claim spousal benefits until the working spouse claims retirement benefits. With file-and-suspend and FAASF options unavailable, many families will have to have both spouses claim their benefits earlier just to get any Social Security benefit money flowing into their pockets at all.
Finally, one fairly tricky strategy has already been limited, but still has some value. Under current law, you can withdraw your application for Social Security within the first 12 months of receiving benefits. This gives you a one-time opportunity to get a do-over on your Social Security decision, and it requires that you pay back the benefits you've received.
In exchange, you reset the clock, and when you decide to go ahead and file a new application for benefits, your monthly check will get calculated based on your age at the time of the new application. That will result in a higher check than you originally received.
The loss of the file-and-suspend and the FAASF strategies will make Social Security planning less lucrative for many retirees. However, there are still some smart things you can to do boost your benefits. Knowing your options is crucial to get you every penny that you're entitled to receive.