Ask Larry

Should I File And Suspend Now?

I will be 62 in October 2016.

My wife will be 62 in January 2020.

I have been reading your book and plan to enroll into your household website ($40) after I finish the book.

Here is my question:

Assuming we delay taking our benefits until we are at or closer to FRA of 66,

Strategy: I am thinking I should file on 7/1/2016 and then suspend sometime before I turn 62 in October 2016.

My thinking is that it protects my self (grandfathered in) on future SS benefits, should the next administration make changes pertaining to the SS program

Your thoughts on this strategy please?

Dan

Hi Dan,

You aren't permitted to voluntarily suspend benefits until you reach full retirement age (FRA), which is age 66 for you and 66 & 8 months for your wife. Unless she was born on January 1st, that is, in which case her FRA would be 66 & 6 months. If you file for reduced benefits at age 62, you will be forced to accept them unless you work and earn too much to receive benefits under Social Security's earnings test. Prior to the year you reach FRA, Social Security withholds $1 of benefits for each $2 that you earn in excess of an exempt amount, which is set at $15,720 this year. Social Security recomputes benefit amounts at FRA to remove the reduction for months of non-payment caused by the earnings test, but your benefit amount will be permanently reduced for any months that you are paid prior to FRA.

Furthermore, the act of filing for benefits in itself is unlikely to result in your being grandfathered from future changes. Even the recent Social Security legislation passed in 2015, which went into effect very abruptly compared to prior legislative changes, did not grandfather anyone on the basis of their having filed for benefits prior to passage of the legislation.

Your best strategy, as is true with almost all couples, depends on your and your wife's benefit amounts, life expectancy, retirement plans and financial situation. If you follow through on your plan to sign up for the maximization software available on this website, it should help you sort out your options so that you and your wife can make the best possible choices.

Best, Jerry

Category: 
Posted: 
Jun 27 2016 - 5:00pm
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