PUBLIC SERVICE ANNOUNCEMENT FOR BOOMERS “OF A CERTAIN AGE”
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.
If you didn’t know about this option, you’re not alone. The Social Security Administration has long been barred by Congress from advertising and promoting its benefits and staff are not supposed to offer beneficiaries any advice or recommendations. They will answer whatever question you ask them (usually accurately), but they won’t offer advice or tell you if you’re making a bad decision. For example, if you turn 62 and immediately file for your Social Security benefits (as most Americans still do), nobody will say, “Um, you know, for each year you hold off on filing until you reach age 66, you’ll get a 7.5% higher benefit check for the rest of your life, and for each year you hold off between age 66 and 70, you’ll get an 8% higher benefit check.” And they won’t inform you about the availability of spousal benefits either.
Over the past several years, I have alerted a number of married friends I knew to be turning 66 and they have availed themselves of this option. I would guess just by that kind of oral advice alone, I’ve helped friends get a combined extra several hundred thousand dollars. I hope this information today will help some TCBH! and other readers also to get benefits to which they are entitled and of which they were unaware..
About that matter of divorced couples: If, before a divorce, you were married at least 10 years to a person who is or will be 66 by April 30, and if you will also be 66 by that date, and if you have not remarried, you are eligible to file for spousal benefits on your ex’s account. In this case, there is no need for your ex to “file and suspend” and in fact, your ex won’t even know that you are filing for spousal benefits. Social Security will check the spouse’s account record to be sure you are eligible, you’ll have to prove that you were married for 10 years and are now divorced, but that’s it. The agency will not contact the spouse or inform them that someone is collecting spousal benefits based upon their account.
Three requests of readers:
* Even if you are not eligible for this file-and-suspend option, please, if you know someone who might be still able to take advantage of it before the April 30 deadline, alert them to this article!
* Also, if this article turns out to help you collect Social Security benefits you didn’t know were available to you, please consider making a “tip” to ThisCantBeHappening.net, either by using the convenient Paypal donate button on this page, or by contributing to our Indiegogo investigative reporting fund-raiser campaign.
Remember — the elimination of this decades-old benefit is just one example of how a vicious Republican Party out to eliminate Social Security, and a weak-kneed Democratic Party unwilling to fight to defend the program (in part because many Democrats are also trying to cut benefits(, together are are whittling away at this key legacy of the New Deal that is the mainstay of the nation’s elderly and disabled. Whether you can use file-and-suspend or not, Join the fight to defend, improve and expand Social Security!