Want More from Social Security? Try "File and Suspend"

If you're approaching retirement and want to get more from Social Security, consider a strategy known as "file and suspend." It can be particularly useful for married couples, especially when one spouse has earned significantly more than the other.

Let's say Jack is the primary breadwinner and has reached his full Social Security retirement age, which is 66 for those born between 1943 and 1954. His wife Jill is 62. They're a traditional couple where Jack has worked fulltime and Jill spent several years out of the workforce raising their children. If Jack started taking his benefit now, he would receive $2,400 based on his lifetime earnings, while Jill would get $600 a month based on her earnings record.

One possibility: Jack might apply now for Social Security--but then immediately suspend collecting. Why bother? Because he applied for benefits, Jill can claim a spousal benefit based on his earnings record. That spousal benefit could be as much as half of Jack's benefit, but it's reduced because Jill is 62 and hence younger than her full retirement age. Because of that reduction, her benefit would be $840, which is still more than the $600 she could receive based on her own earnings record. If Jill wanted a larger monthly check, she could wait to claim her spousal benefit.

Meanwhile, the couple could opt to dip more heavily into savings so Jack can put off restarting his Social Security benefit until age 70. That would increase his monthly check to $3,168. (This doesn't reflect any increases for inflation.) If Jack dies before Jill, she can give up her spousal benefit and start taking his higher benefit as a survivor benefit. In effect, for Jill, the file-and-suspend strategy has two big advantages: In addition to getting more money with the spousal benefit, she could also potentially get a larger survivor benefit. For additional information, contact your local Social Security office and also consider discussing the implications for your overall finances with a financial professional.

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