Collecting Social Security is not a no-brainer. By controlling the timing of payouts through “file-and-suspend,” you can maximize benefits while customizing who gets what when. Here’s how.

Most of us have paid into the Social Security fund most of our lives. So it’s worth spending a little bit of time strategizing about the payout. What you choose to receive when can make a big difference. So I typically sit down with our clients – especially those in their late 50s and early 60s – to review the options and bring to their attention that it’s OK – and often beneficial – to file and suspend.

On Route to Age 66

The general idea is to file to receive Social Security when you reach age 66, the official retirement age, but to suspend your payments. While your payments are suspended, you accumulate delayed retirement credits that will increase your eventual benefit — currently by 8% annually until age 70.

Keep in mind that if you do file and suspend:

• Your spouse and/or young child can begin collecting the benefits they’re entitled to under your record, while you (the worker) postpone collecting your own benefit.
• You must be the official retirement age, which is currently 66.
• Your benefits will increase for four years – until you turn 70.

Three Reasons to File-and-Suspend

1. To trigger benefits for your spouse, while deferring your own Social Security benefits until they’re worth more, up to age 70.
2. To trigger dependent benefits for children who are minors.
3. To lock in your filing date, in case you opt later to receive all your Social Security benefits in a lump sum rather than a higher monthly benefit.

If you’re SINGLE, even if you expect to delay claiming Social Security benefits until past the official retirement age, you may still want to file and suspend at age 66.  This will give you the option to claim a lump sum as of the suspension date, rather than a larger monthly benefit later on.

If you’re a MARRIED COUPLE (including same-sex couples living in a state that recognizes their marriage), you should coordinate benefits:

• In most cases, it makes sense for the higher-earning spouse to delay benefits as long as possible, up to age 70, to lock in the maximum retirement benefit, as well as the largest survivor benefit (should the higher-earner die first).
• The lower-earning spouse may want to claim reduced benefits early — at age 62 — if he/she is no longer working.
• Another strategy is to restrict your claim to spousal benefits only – this lets you collect half of your spouse’s full retirement-age benefit, while deferring your own benefit until it’s worth more later on.

Remember: It is essential to get estimates for each spouse/partner, consider your circumstances, and actually crunch the numbers.

Social Security: The Inside Story

Hands down, my favorite book on this topic is Social Security: The Inside Story by Andy Landis, a well-known retirement expert whom we’ve had speak at client gatherings in the past.