Understanding the Social Security Claim and Suspend Strategy

Personal finance writers and married baby boomers have been talking and thinking a lot about different ways to maximize total Social Security benefits for the married couple. One of the most frequently discussed approaches is the “claim and suspend” strategy. There is a lot of confusion about how this works.

Using the claim-and-suspend method, one spouse files a claim for his or her Social Security retirement benefit, then immediately volunteers not to receive that benefit. This is called  “suspending” the benefit. What this does, however, is allow the spouse to claim and receive a spousal benefit based on the suspended benefit of the other spouse. Meanwhile, the spouse that claimed then suspended can continue to accrue work credits for an increased benefit at age 70. I have written about this in the past, when I discussed different concepts in Social Security spousal benefits. That post and a few others like it generated a lot of questions sent to me, asking for further clarification.

Here are some potential areas of confusion that may lead to problems or mistakes:

1. Claiming and suspending may work best (if at all) only if the “claim and suspend” spouse has a larger work record and benefit. According to Social Security rules, a person claiming retirement benefits must receive the greater of the benefit to which he or she is “entitled”, either the spousal benefit (e.g.,  the benefit based on the spouse that has filed and suspended) or based on his or her own record. The maximum spousal benefit is 50% of the suspended benefit. Let’s assume that the husband is entitled to $1,500 a month based on his own work record. His wife is entitled to a $600 a month on her record. The husband can file for benefits at full retirement age then suspend them. The wife can file at full retirement age for a spousal benefit and receive $750 a month, earning the couple an extra $150/month. (A worker who claims and suspends is still technically “entitled” to receive the suspended benefit.)

But watch what happens if the couple have relatively equal earnings histories and each try the “claim and suspend” strategy. In this scenario, let’s assume that the husband is entitled to a suspended Social Security retirement benefit of $1,200 a month. His wife is entitled to receive a benefit of $1,000 a month on her own work record. Thus, in each case, the benefit based on the personal work record is larger than 50% of the potential spousal benefit. ($1,200 is greater than $500, and $1,000 is greater than $600.) If each spouse claims and suspends, neither spouse would qualify to receive any benefit because his or her own benefit (now suspended) would be larger than the spousal benefit. The entire strategy backfires.

2. Claim and suspend only works at full retirement age. Under existing SSA rules, a worker can claim and then suspend a retirement benefit only after reaching full retirement age. The delayed work credits then accrue at 8% annually until age 70, at which time you should “unsuspend.”

3. The spousal benefit can be permanently reduced. If one spouse is younger and the older spouse “claims and suspends” there is a potential problem with the strategy. If the younger spouse files a claim for a spousal benefit before reaching full retirement age, the spousal benefit will be less than 50% of the suspended benefit. (Only those who have reached full retirement age can receive a full 50% spousal benefit.) The amount lost will depend on the number of months before full retirement age. What some folks don’t understand (and what I believe to be the case)  is that this decreased spousal benefit percentage is permanent. Even if the younger spouse later claims a Social Security retirement benefit based on his or her own work record, that benefit will be reduced by the fact that he or she had previously filed for a spousal benefit before reaching full retirement age.

4. The spousal benefit does not increase with the suspended benefit. Some people believe that the spouse claiming a spousal benefit based on the other spouse’s suspended benefit will get an increased spousal benefit when the other spouse reaches age 70 and “unsuspends.’ My interpretation of Social Security rules is that this is not the case. The maximum spousal benefit is 50% of the “Primary Insurance Amount” which is the benefit at full retirement age, period. (If I am wrong on this, I’m sure some observant reader will tell us in a comment.)

As always, rules can be changed and be subject to different interpretations by those in charge. My point is not to make assumptions that “claim and suspend” will maximize your lifetime Social Security income as a married couple without digging deep into the rules and the numbers.


Comments

  1. John says

    When I contacted SS they said we could both claim and suspend (not lose benefits) as long as we both were full retirement age.

      • John says

        Thanks for getting back to me and any insights are appreciated. We both want to claim and suspend because we would like both of our primary benefits to grow to the maximum. We called the SS office and they said we could each claim and suspend (and we would collect each other’s spousal benefit). My benefit is almost exactly double my spouses. Also, I am still working so we don’t need the benefit right now, but if we can take the spousal benefit and still increase the primary benefit that would be great.

  2. says

    Your article helped clear up some questions I had about the claim and suspend policy, specifically that the higher wage earner must be at FRA and that the spouse’s benefits will be reduced if she is not at FRA.

    My first question is, can my wife (the lower income spouse)file for benefits on her own work record at 62 and then switch to a spousal benefit when I turn 66 and file a claim and suspend?

    Second question. Assuming starts collecting SS at 62 on her own wages and keeps working (but making less than $14000 per year), does she continue to pay into the Social Security system and does her benefit increase because of additional working history?

  3. says

    Your articles are excellent and detailed.

    My Wife and I are same age, however she raised the kids, I paid for it.
    Question is, can my wife (the lower income spouse)file for benefits on her own work record at 62 and then switch to a spousal benefit when I plan to retire at 65. My FRA is 66. Alternative she file a claim and suspend at 65 or 66??
    Please help I have read everything, no clarification.

    Chris

    • Mr. GoTo says

      Chris: Your wife can file on her own benefits at age 62 then switch to a spousal benefit but since she claimed a benefit before full retirement age, her spousal benefit will be permanently reduced. As for her using a “claim and suspend” strategy on her own record, I don’t understand what benefit either of you would gain from doing that. Maybe I don’t understand exactly what you are contemplating.

  4. gordon says

    I am 66. My wife will turn 62 in July. At that time our intention is for her to begin collecting her SS (about $750 per month). I, at the same time, will file, suspecd and claim as her spouse. Because I am at full retirement age I will get 1/2 of my wife’s full benefit (what she would have collected at 66)or 1/2 of $1000 (not 1/2 of $750). We will conmtinue with this until I am 70 (or sooner at my option) and I will then UNsuspend and begin collecting my full benefit enhanced at 8% per year for every year I have delayed beyond 66. Under no circumstances can my wife ever collect more than her $750 (plus inflation) until I die and then she will collect an amount equal to what I received in the month before my death. Does everyone agree that this works?
    Thank you. gmg

    • says

      I do not think this will work. You can’t claim and suspend your own benefit, then claim a spousal benefit that is lower than the suspended benefit to which you are entitled.

      • gordon says

        hi I will retate what I meant using your more correct vocabulary.
        When my wife turned 62 she began receiving benefits on her account. No problem there, of course. On the same date, I, already 66, filed as her spouse. This works for delaying my claim on my account allowing my ultimate bednefits to grow 8% per year. in the meantime I receive 1/2 of what my wife would have received if she had waited until she was 66. Bottom line, I am receiving $500 per month AND my own benefit account is growing at 8% and I can switch to that account whenever I want. I was told by the SS guy that this is perfectly legal, is rarely done, and he called it “A vs B”.

  5. Chrstine Berg says

    Mr. Go To are you still around, you are saying you cannot claim and suspend at 62 , correct? What happens if a person has a disabled adult child and both parents have a situation where they are entitled to say over $1,000 a month due to substantial earnings. One Parent works, the other other works but does not receive wage income, the parent who works probably cannot get SS at 62 due to earnings being too high.

    What happens if you have a DAC before 22 or other dependents?

    • Gwennie says

      I am waiting for your answer to Chrstine Berg, above. I am 48 and my husband is 61. We have 8 year old triplets. We plan for him to file and suspend at 62 so that they can receive benefits on his record (he will receive maximum benefits whatever he does). Our math (and research from other reputable sources) tells us that–because there are 3 of them–the partial benefit they would receive is over the family maximum, so there is no reason for him to “not” file and suspend at 62. Would love your feedback on this–thanks!

  6. Stan says

    I am the much bigger earner. My wife is three and half years my senior. My plan is for my wife and I to apply for benefits to begin when she is 66 and I am 62.5 (application planned for 3 months before her 66th birthday). Are you telling me that either (1) that I will NOT be permitted to suspend (I plan to keep working until at least 70) or, that my wife will not be eligible for spousal benefits after I suspend; but will only be able to collect on her own (much lower) work record?

  7. Becky says

    I just became aware of the “file and suspend” strategy today. I’m still trying to understand it. My husband is 59 years old and collecting a non-qualified pension. He works part time as a substitute teacher in Illinois (normally doesn’t even make $5,000. per year subbing). I am 57 and still working full time. If I retire right now, can my husband do this file and suspend strategy so I could start drawing on his Social Security, which he is not even drawing on? If so, my husband’s Social Security benefit as of today would be $1,860. Just how much of this could I receive on a monthly basis? By the way, I have made more than my husband for the past 20 years, but he has been retired and collecting his pension for the past 10 years.

  8. Becky says

    I may have confused you. If my husband was ay full retirement age (66), he would receive $1,860. per month. Of course he would not receive this amount now because he is only 59.

  9. Andrea says

    I am a 61 yr old female and have been disabled for 15 yrs due to multiple medical issues. I was married for 34 yrs and then my ex husband and I divorced can I do the file and suspend on my ex’s Social Security now if he is only 63 even though I am disabled and collect full benefits at 61yrs old at this time can I file suspend on his account at my age of 61. He made way more than me over the yrs so I am sure he would have a large Social Security benefit at 66 than me although he is only 63 or would I have to wait until he is 66 to file and suspend to collect on his account. Also aside from the question above here is another question I have for you also. When my ex turns 66 can I draw on his account and how much would I get percentage wise from his account, would it be 100% or would it be less than 100% and would I have to be 66 to get it or since I am disabled can I receive the full amount. I am about 1 -1/2 yrs younger than him. If I remarry can I draw off of the new husband and would I have to be married 10 yrs to be able to draw off of the new husband if he passed away, if I remarried or does the 10 yr rule pertain to a second marriage. Also can I file and suspend on a new spouse account? Thanks Andrea

  10. RB says

    I will be 66 January of 2015. My wife is 66 and will be 67 in October of 2014. My wife started her social security at 62 and will be eligible for full retirement in a few months. Since my wife has already begun her SS can I still apply and suspend and will it benefit my wife. At 66 I will draw over twice as much as my spouse.

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