Q & A
How do I maximize my Social Security benefits?
Complete Question: I keep hearing all these terms like “file and suspend”, “voluntary suspension”, “claim and suspend”, and “restricted application” that are supposedly meant to maximize my Social Security benefits. Are they all different terms for the same thing? Are these real ways to maximize benefits or is this just “talk”?
Answer: These are actually “real” ways to maximize benefits! Of course, there’s always some sort of catch. For example, ALL of these strategies require you to be full retirement age (FRA) in order to use them. So if you’re currently under the age of 66, they won’t do you any good right now. If you are FRA, you may want to think about these options.
First of all “file and suspend” and “claim and suspend” are the same thing. In order for a spouse to receive benefits, the Social Security Administration (SSA) requires the other spouse (the retired worker) to file for his/her own benefits first. However, sometimes the retired worker (also called the “beneficiary”) wants to wait to file in order to receive delayed retirement credits. Therefore, the beneficiary can “file and suspend”, which activates his/her benefits so that the spouse can receive spousal benefits while suspending the beneficiary benefits. For example, say Frank and Mary are both 66. Frank wants to wait until the age of 70 to receive his benefits so that he can earn delayed retirement credits, but Mary wants her spousal benefits since she did not work long enough to get her own benefits. Frank can file and suspend, thus allowing Mary to receive spousal benefits, but Frank has his benefits suspended until the age of 70.
“Restricted application” is kind of the reverse of file and suspend. Let’s say Frank and Mary have both worked enough to have their own benefits. By law, Social Security pays your own benefit first, but Mary wants to delay her benefits and earn delayed retirement credits. Therefore, she can file a restricted application which will allow her to collect spousal benefits while suspending her own benefits.
Finally, “voluntary suspension” is not related to spouses. At any time after FRA, you can stop your benefits and start earning delayed retirement credits until you reinstate them (up until the age of 70). For example, let’s say you are age 67 and you receive an inheritance, sold a house, or something else happened that caused you to not need your Social Security benefit for a while. Then you can voluntarily suspend your benefits until you decide you want them again and during that time period, you will earn 8% per year (up to a total of 24% if you start at age 67) until you decide to reinstate them.