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Robert A. Di Ieso, Jr.

How to Max Out Your Social Security Benefits Under the New Rules

Mar 29, 2016

Q: I am 62 years old (born May 1953). My wife is 60 years old (born December 1955). Am I still eligible for the “file-and-suspend rule” if my wife is currently only 60 years old? Does she have to be 62 years old when the law takes effect at the end of April? Or, can I file for “file and suspend” now and wait until my wife turns 62 in 2017, then claim a spousal benefit based on her earnings record. At this point, I'd like wait until I am 67 to re-apply, then collect my own benefit at a larger amount. -- David

A: David, you and your wife are out of luck, I'm sorry to say. Both of you are too young to use either file and suspend (in your case) or file a restricted application for just a spousal benefit (in your wife's case).

Under the new Social Security rules, only people who reach full retirement age, or FRA, on or before April 29 will be able to file and suspend by that deadline.

For those who turned age 62 on or before January 2 of this year, you are grandfathered under the new laws in one respect—when you reach your FRA, you can still file a restricted application only for a spousal benefit. With this option, you will be able to let your own retirement benefit grow through delayed retirement credits. (Filing earlier than FRA will reduce your benefits, trigger earnings test benefit reductions, and prevent you from ever being able to receive your own maximum retirement benefit.)

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In David’s case, the first of you to file for your retirement benefit will receive only that benefit. The second to file for any benefit will be deemed to be filing for both their own retirement benefit and a spousal benefit based on the earnings record of the first spouse. They will receive an amount roughly equal to the greater of the two benefits. For this reason, you should be very careful about filing for any benefits before FRA.

You may even want to wait till age 70 to claim—each year you delay filing, your benefits increase 7% to 8% annually until age 70. That's why I'm a big proponent of delaying claiming Social Security as long as possible. The ability to receive these increased benefits, including inflation adjustments, for the rest of your life amounts to very good longevity insurance against living well into your 90s.

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I even recommend that people spend down a portion their 401(k)s rather than take Social Security benefits early, although I know this is a very tough call. But with file-and-suspend ending, it's important to look at every option for maximizing your retirement income.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security.” A revised edition explaining the new Social Security rules will be published May 3. His companion book, “Get What’s Yours for Medicare: Maximize Your Coverage; Minimize Your Costs,” will be published in October. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

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