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Last Chance To File-And-Suspend Retiree Benefits

A new law is ending a popular Social Security retirement strategy, but some couples still have a little time left to pull off the maneuver.

Under the "file-and-suspend" strategy for retirees, the higher-earning spouse applies for Social Security retirement benefits at full retirement age (FRA) – age 66 for those born between 1943 and 1954 – and then suspends the benefits until a later date, typically age 70.  This entitles the higher-earning spouse to greater monthly benefits in the future.  In the meantime, the lower-earning spouse can claim spousal benefits, providing a greater amount than that spouse otherwise would have received.

But the Bipartisan Budget Act, signed on November 2, 2015, closed this loophole. Effective six months after the date of enactment, the file-and-suspend strategy is no longer available.  If the higher-earning spouse suspends benefits, that also will suspend spousal benefits for the lower-earning spouse.

Despite the change in the law, retirees already using this strategy are grandfathered in and can continue to use it.  And if you qualify, you can get in under the wire before May 1, 2016.  For example, a higher-earning spouse who turns age 66 on April 1, 2016, could apply for benefits and then suspend them, generating greater benefits for the couple.

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