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If You and a Spouse Will Both Be 66-69 by April 30, There's a Pot of Money Just Waiting for You to Ask for It

Not your typical TCBH! article, but urgently important for several reasons:



We don't usually write about money on this site, but this is important.

Last November, as has become standard Washington politics, the Republican party held the federal budget submitted by President Obama and the Democrats hostage, demanding all sorts of non-budgetary concessions and cuts in social spending. Ultimately, the president and the Democrats caved in to get the budget passed. One of the things they did was agree to some cuts in Social Security benefits.

One of those cuts was to eliminate a measure that for years has allowed married couples who both reach 66 (or someone who had divorced a spouse of more than 10 years, but more on that later) to collect some money as a "spousal benefit" without either spouse actually starting to collect their own benefits. The advantage of this arrangement was that if both spouses could continue to hold off on collecting benefits on their own accounts, waiting four more years until reaching 70, their ultimate benefit checks would be 32% greater for life in real dollars than if they started collecting benefits at age 66.

The process was called "file-and-suspend," and here's how it works. The higher-earning spouse on reaching 66, goes into a local Social Security office and asks to make a "restricted application" for Social Security benefits, filing for those benefits but then immediately at the same time saying he or she doesn't want to receive any checks until age 70 (this cannot be done on line -- only in person). The lower-earning spouse, also 66, then files for spousal benefits on the first spouse's account, and immediately starts receiving monthly checks equal to one-half of the benefit the first spouse would have received had that spouse not suspended benefits. Such spousal benefits can range from a low of around $6000/year to $14,500/year, or a total of $24,000 - $58,000 over four years!

The urgent news is that although this benefit was eliminated in the November budget deal, it is still available until the end of federal office hours at the Social Security office on April 30.

So if you and a spouse will be 66 by that date, you should immediately make that appointment (it can take as long as a month to get one because of cuts in Social Security office staffing, so don't wait!), and go in to make that file-and-suspend and that spousal benefit request.

My wife and I were lucky enough to be able to take advantage of this option, getting in under the wire of the April deadline and I as the lower earner started receiving my spousal benefit check of $983.00 beginning this January. It will amount to a total of almost $40,000 for us by the time I reach 70 and switch over to receiving maximum benefits on my own account.

story | by Dr. Radut