Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details.
This question continues to come up in my interactions with readers, so I thought I’d run through some more examples to illustrate the options and issues. The question is:
Can both spouses file and suspend upon reaching Full Retirement Age, and collect the Spousal Benefit on the other spouse’s record, allowing our own benefit(s) to increase to age 70?
Regarding file & suspend and taking spousal benefits, although technically both of you could file and suspend at the same time, only one of you *might* receive spousal benefits at that point. The reason is that once you file (regardless of whether you suspend) the spousal benefit is then limited to the amount over and above your own Primary Insurance Amount (PIA), up to 50% of your spouse’s PIA. (Remember, PIA is the amount of benefit that you would receive at exactly Full Retirement Age.)
For example, if you and your wife have PIAs of $2000 and $800 respectively and you both file and suspend, your wife could file for spousal benefits of $200 (half of your PIA minus her PIA equals $200). However, you would not be eligible for a spousal benefit since half of your wife’s PIA minus your PIA is a negative number.
Now, if we change the numbers so that you have a PIA of $2,000 and your wife’s PIA is $1,200 and both of you file and suspend, neither of you would be eligible for a spousal benefit. Half of either of your PIA’s is less than the PIA of the other, so no spousal benefit is available if both file and suspend at the same time.
Typically this works out best if only one spouse files and suspends, usually the one with the greater PIA, and the other spouse files a restricted application for spousal benefits only. Using my first example numbers, if you filed and suspended and your wife filed a restricted application for spousal benefits only, she would be eligible for a $1,000 spousal benefit, and both of your own benefits would accrue Delayed Retirement Credits (DRCs) up to age 70. At that point, again, using the first example numbers, you would be eligible for a benefit of $2,640, and she would be eligible for a benefit of $1,056.
Another way this could be done would be for your wife (again, working with the first numbers) to file for her own benefit at Full Retirement Age, receiving $800 per month. Then you could file a restricted application for spousal benefits only, and receive half of her PIA, or $400 per month. You’d continue to receive this for four years until you reach age 70, at which point you would file for your own benefit, enhanced by the DRCs to $2,640. At this point your wife could file for spousal benefits, increasing her own benefit to half of your PIA, or $1,000. This second option actually gives you more money over the four-year span from FRA to age 70, but your wife’s benefit would be limited to a maximum of $1,000 (rather than $1,056) for her lifetime or yours, whichever is shorter.
At any rate, hopefully this resolves the question once and for all – while technically both spouses can file and suspend at the same time, there’s not a lot of reason to do so as the spousal benefits would only be available to one of them, at most.
If you have other situations that you’d like to review, leave a comment below and I’ll do my best to answer promptly.