Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My client is 68 and his wife is 62. Can he file and suspend for Social Security retirement benefits, and if so, can his wife begin receiving spousal benefits?
Answer: Yes, the husband may choose to file and suspend. If he does so, his wife can begin receiving spousal benefits, subject to reductions in her benefits.
Generally, a spouse cannot begin receiving spousal benefits until her spouse (the “retiree”) has filed for his own retirement benefits. Therefore, a problem arises where a spouse wants to begin receiving spousal benefits now, but the retiree wants to defer his retirement benefits to take advantage of Delayed Retirement Credits (DRCs). One possible solution is to file and suspend, meaning the retiree files an application for his Social Security benefits and then immediately suspends the benefits.
To be eligible to file and suspend, the retiree must have reached his or her full retirement age (FRA). Only one spouse may elect to file and suspend. To be eligible to receive spousal benefits, the spouse must be least 62 years of age. If she has not reached her FRA, the spousal benefits are permanently reduced based on when she began receiving spousal benefits. Additionally, by taking spousal benefits before she reaches FRA, she will be deemed to have filed for her own Social Security benefits, and thus permanently reducing her own retirement benefits. If the spouse has reached her FRA, then she may receive spousal benefits without filing for her own retirement benefit.
Here’s an example. Suppose John and his wife, Jane, are both 66 years old, have both reached FRA, and are eligible for benefits of $2,000 per month and $1,200 per month, respectively. If John files and suspends, Jane may immediately begin collecting a spousal benefit equal to 50% of $2,000—her husband’s retirement benefit at FRA—equaling $1,000. Since Jane has reached FRA, she may begin receiving spousal benefits without filing for her own benefits. Since John filed and suspended, and Jane did not file, both are accruing DRCs on each of their own accounts.
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