Window Closing to Maximize Social Security Benefits Using Popular Strategy

Eligible and Future Retirees Have Until April 30 to Take Advantage of Strategy That May Increase Benefits

There are many strategies married couples can utilize when trying to maximize their social security benefits. However, eligible couples (including divorced individuals who meet certain criteria) who were hoping to take advantage of the File and Suspend Social Security strategy as a means of maximizing their benefits must act soon or they will have to rethink their plan.

The Bipartisan Act of 2015 will eliminate the strategy after April 30, 2016 for all eligible and future retirees who have not yet claimed Social Security benefits. This means spouses or other dependents will no longer be able to collect off the suspended benefit as a way of increasing the amount of money they receive from Social Security.

The good news is there is still a short amount of time for people who are eligible to collect Social Security to use this approach.

“If you’re married and you’ve reached your full retirement age, which depends on what year you were born, it may be beneficial for you to consider taking advantage of this strategy as a way of increasing your Social Security benefit before the change goes into effect,” said Todd Grantham, wealth management advisor with Northwestern Mutual’s Durham office. “If you’re not old enough to take advantage of this strategy before the window closes, you should be looking at how this change may affect your income in retirement.”

Under the File and Suspend strategy, a higher-earning spouse can file for Social Security at full retirement age and delay receipt of benefits until age 70 to earn delayed retirement credits. The lower-earning spouse can then file for spousal benefits. By filing and suspending, the higher-earning spouse’s benefit will continue to grow and earn delayed retirement credits while allowing the spouse to claim a spousal benefit.

The legislation also expired the Claim Now, Claim More Later Social Security benefit for anyone who did not turn 62 by the end of 2015. While this means the end of another strategy for many retirees, married couples who fall within the age requirement are grandfathered in and can still file a restricted application to claim spousal benefits when they reach full retirement age, then defer to their own greater benefits at age 70.

Grantham recently helped a married couple, who was still qualified to collect Social Security using the Claim Now, Claim More Later method, realize how the strategy could benefit them.

After a career in the healthcare industry, the wife, 63, was retiring, but her husband, 55, earned a much higher income. Under their circumstances, the wife could file for Social Security and begin receiving $1,058 per month as her benefit. Then in 12 years, when her husband reaches his full retirement age, she could begin claiming the spousal benefit and her benefit would increase to $1,907 per month. If the husband delayed collecting his benefit until age 70, it could result in $211,939 of additional Social Security benefits if they both live to age 95.

“Social Security benefits are an essential part of most people’s comprehensive financial plan to fund retirement and there are a number of strategies to maximize your benefit,” says Grantham. “A financial professional can help you evaluate your whole financial picture and work with you to develop a plan that will last throughout your retirement.”

Grantham explained the easiest way to get a larger benefit is to wait longer to claim it. If you wait until age 70 to start receiving Social Security, your benefit will increase by a flat 8 percent each year (plus any cost-of-living increases) from your full retirement age until you reach age 70. This “delayed credit” can help boost your retirement income over time.


Article prepared by Northwestern Mutual with the cooperation of Wealth Management Advisor Todd Grantham, CFP ®, ChFC ®, CASL ®, MSFS, ChSNC. Grantham is an insurance agent of Northwestern Mutual based in Durham, where he lives with his wife Robyn and four daughters. Email Todd at Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wisconsin, and its subsidiaries. Todd G Grantham is a Representative of Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI (fiduciary and fee-based financial planning services), a subsidiary of NM and federal savings bank. The Chartered Advisor for Senior Living (CASL®) designation is conferred by The American College of Financial Services. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals