Did you, or someone you know, start Social Security too soon?

whyDid you know that even if you started Social Security early, you can suspend your benefit after you have reached Full Retirement Age (FRA), (between 65 and 67 depending on your birth year) and then restart it again anytime up to age 70! You might ask “Why would you do that?”

You may not have an interest in getting Social Security yet (you are under age 60) … but you likely know someone coming up on, or already have, started it.

Knowing the rules may help maximize retirement income.



Even though a person’s Social Security was reduced because they started it early, by suspending their benefit after reaching FRA, they STILL get an 8% per year increase on their benefit (called Delayed Retirement Credit – DRC). For someone born after 1942 for example, a 4 year suspension equals a 32% benefit increase. A 2 year suspension equals a 16% benefit increase. An 8% annual guaranteed benefit increase is hard to get safely anywhere else today.

FRANow, for couples, the other spouse at FRA can file and restrict their filing to spousal benefit only, even though their spouse has suspended their benefit as described above. This offsets not getting the full benefit amount because of this suspension by the other spouse.

Then, when they each reach age 70 (or any earlier age if they need to), they restart their full benefits with the Delayed Retirement Credits applied (a larger monthly payment). This way, both spouses can delay their benefits so they are maximized at age 70. One spouse suspends their benefit, the other spouse restricts their application to spousal benefits only.

By the way, for couples maximizing retirement income in this manner also has the effect of maximizing survivor income from Social Security too.

For singles or couples, it may be possible to combine this above strategy with a bridge strategy to fund your income for these couple of years of lower, or no, Social Security benefits.

By having higher Social Security benefits by age 70, this takes stress off the portfolio to sustain a higher income for potentially many more years because Social Security payments are now higher which means you can take less from your portfolio to help it last longer.

Another scenario – someone is receiving Social Security and then find a good job before they reach their FRA (defined above). Should they take the job and “lose” their Social Security because of the earnings test limits? For those months that they don’t get their Social Security benefits, the effect is as if they filed for their benefits later than they did. In other words, it doesn’t hurt their benefit amount later, and may actually increase it. Social Security updates the earnings history each year you work even after you start benefits. Then, when they reach FRA, they can suspend benefits in order to get the DRC credits (defined above) as explained earlier.

If you go to your Social Security office, they often encourage you to start benefits as soon as you are eligible. They are not allowed to counsel you on strategy unfortunately.

So if you, or you know someone, who started their benefit early … there are strategies to still enhance their benefits or take that job they like.

These are just a few of many examples of Social Security strategies and the long term impact of decisions on your benefits. Everyone’s situation is different and other strategies not discussed here may also be factors to consider too.

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3 Responses to Did you, or someone you know, start Social Security too soon?

  1. Larry Frank, Sr. November 2, 2015 at 8:52 am #

    The new law ” Bipartisan Budget Act of 2015 * ” has removed two prior strategies that couples used to have since 2000. “File and suspend” and “Restricting the application to spousal benefits” are no longer viable strategies. The two strategies above were removed by the new law as “low hanging fruit” (most obvious opportunities because they are readily achievable and do not require a lot of effort) on Congress’ efforts to save money in the Social Security trust fund structure.

    Strategies for the divorced or survivors are still viable, as are many other claiming strategies however … so all is not lost! File and suspend IS still available to stop benefits and start again later. What was changed is the ability for the spouse to then claim benefits on the suspended workers’ file (deeming rules were changed so this doesn’t happen). Again, benefits can be suspended after reaching Full Retirement Age – but now for a reason closer to that described in the paragraph “Another scenario” in the text above.

    *Subtitle C: Protecting Social Security Benefits. Sec. 831. Closure of unintended loopholes.


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