The File and Suspend Tactic for Social Security Benefits

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 is another provision of the Social Security system that is filed under the “Little Known Facts” section – although it is becoming more known these days.  How it works and what’s important about it is the subject of this article.

How File and Suspend Works and Why It’s Important

Any worker can establish a benefit amount by applying at any time after Full Retirement Age – but he or she doesn’t have to continue receiving that benefit.  The worker can immediately suspend the receipt of benefits, so that seemingly the application is moot.  However, what this has done is establish a “base” for the worker’s spouse to begin receiving benefits based upon that amount.

Here’s an example:

A worker is at Full Retirement Age (FRA), and his or her spouse is the same age.  Since the spouse of the worker has a much lower benefit available based on his or her own record, and as such is looking forward to utilizing the primary wage earner’s earnings record to receive the Spousal Benefit.

At the same time, the couple prefers to delay receiving the primary wage earner’s benefit as long as possible, to age 70, in order to receive the maximum increases (see here for more details).  In order to achieve both goals, the primary wage earner applies for benefits at FRA, and then immediately suspends receiving the benefit.  This establishes the amount that the lower-wage earning spouse can begin receiving in Spousal Benefits, while at the same time allows the primary wage earning spouse’s record to continue increasing in value until he or she reaches age 70, the maximum age to delay.

How To Do It

The mechanics of this option did not become available until 2000, and as such (believe it or not) sometimes the Social Security Administration (SSA) personnel are not aware of this option.  It is still not available to be applied for online (as are most other benefit options) so you need to visit your local SSA office to complete the process.

In order to ensure that the SSA personnel are clear about what you’re doing, you should download the Social Security Legislative Bulletin 106-20 (available at this link) which explains the provision fully.  The provision is part of the Senior Citizens’ Freedom to Work Act of 2000 – and the third bullet point of the Bulletin is what you want to point out as proof that you can pull this number.

Soon enough, SSA personnel are going to get this one straight as more and more folks do this maneuver, so be patient with them, and download the bulletin and take it with you to make sure you get what you’re asking for.

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