A deadline will lapse on April 30, 2016, that allows those that turn age 66 by this date to File and Suspend their Social Security benefits. First of all, what is File and Suspend? This is a claiming strategy that allows you to file for your benefit, collect your benefit at a later date, and allow your spouse to file a Spousal Benefit off your benefit (50%) at Full Retirement Age. This other party must also meet the age requirements under the new law.
What kind of difference does this make? It can make a huge difference not only in your lifetime benefit, but in your Survivor’s lifetime benefit amount. How does this work? First of all, File and Suspend allows both the party that turns 66 by April 30, 2015 and the Spouse (if he or she meets the required age standards put in place by the new law) to be able to receive Delayed Retirement Credits on their respective benefit amount, and also receive an income stream. Also, by accruing Delayed Retirement Credits, the Survivor Benefit will increase as well. Another perk, is that under certain circumstances, you can qualify for a Lump Sum Provision or Retroactive benefits.
Let’s use an example: Tier 1 (age 66 by April 30, 2016) Tier 2 – (must be age 62 by December 31, 2015)
Sammy is age 67 and has not filed for his benefit. Susie is age 65 and has not filed for her benefit. Sammy’s Full Retirement Age Benefit is $1830.00, and Susie’s Full Retirement Age Benefit is $1950.00. Since Sammy is already age 66, he qualifies for File and Suspend (Tier 1). Susie is eligible for Spousal Benefits since she is currently 65 (Tier 2). Here is a list of several of their options:
- At age 66, Susie files a Restricted Application off Sammy. At age 70 she files for her own benefit which has accrued Delayed Retirement Credits. Sammy begins his benefit at age 67 – 10 months when Susie files for her benefit. Lifetime benefit is $888,905.00 and Survivor Benefit will be $2,574.00.
- They can both file at Full Retirement Age – Lifetime Benefit will be $833,090.00 and Survivor Benefit will be $2,098.00.
- They can both wait until age 70 – Lifetime Benefit will be $840, 153.00 and Survivor Benefit will be $2,574.00.
- Sammy can draw a Spousal Benefit off Susie and Susie draws her Full Retirement Age benefit; Sammy then draws his full benefit at age 70. Lifetime benefit will be $868,200.00 and Survivor Benefit will be $2,416.00.
- Sammy can File and Suspend his benefit prior to April 30, 2016. Susie files for a Restricted or Spousal benefit at age 66 and converts to her own at age 70. Sammy draws his full benefit with Delayed Retirement Credits at age 70. Lifetime benefit will be $884,075.00 and Survivor Benefit will be $2,574.00.
As you can see, by having the opportunity to use the File and Suspend claiming strategy, the clients benefit increases by over $50,000 from Full Retirement Age. And the Survivor benefit increase is $500 per month for life.
Under the new law, these claiming strategies will no longer exist. Do not delay in having this opportunity professionally analyzed……the CLOCK is TICKING!!
You can contact Pillars LLC at 601-954-0699 or visit our website at www.pillarsllc.com for further information.