Social Security Choices

Secret Strategies

Below are four examples of the little-known or poorly understood strategies we employ to help you maximize your Social Security benefits. When appropriate, these and other strategies may increase your lifetime Social Security benefits substantially (by tens-of-thousands of dollars in some instances).

File and Suspend for Married Couples

A strategy that many married couples will find valuable is the "file and suspend option." It comes into play only when the spouse who does the "filing and suspending" has reached his or her full retirement age, currently 66 for most Social Security claimants. The other spouse can be as young as 62.

To illustrate the usefulness of this strategy, suppose a wife wants to claim spousal benefits on her husband's earnings record immediately, while her husband wants to wait a few years before starting his own retirement benefits. In this situation, if the husband has not reached full retirement age, these preferences conflict with one another. Why? Because a wife (or husband) cannot claim a spousal benefit unless the husband (or wife) claims benefits first.

However, if the husband has reached full retirement age, the file-and-suspend strategy offers a way around this limitation. Upon reaching full retirement age, the husband can file for benefits, but then immediately suspend receipt of those benefits until some future date. The benefit suspension allows his benefits to continue to grow at eight percent per year but does not keep the wife from getting spousal benefits now.

Filing a Restricted Application for "Free Spousal" Benefits

When married people (and many divorcees) reach their full retirement age, they have the option of filing a restricted application for spousal benefits only, letting their retirement benefits continue to grow. These spousal benefits are "free" in the sense that one does not need to give up anything in order to get them. In contrast, anyone claiming spousal benefits prior to their full retirement age incurs a cost: they are forced by the SSA to also claim their retirement benefits.

We find that optimal claiming strategies rely more frequently on restricted applications than on filing and suspending. To learn more about the restricted application (or free spousal) strategy, visit this page.

Benefits for Divorcees

Are you divorced (and not remarried)? If so, then you may be aware that divorcees may be able to claim benefits on their former spouses earnings record, provided certain requirements are met (for instance, your marriage lasted at least 10 years and you have been divorced for at least 2 years).

But, you probably do not know that divorcees who qualify for benefits receive more favorable treatment from Social Security than do spouses. If a spouse wants to claim spousal benefits, then the other spouse must also claim their own retirement benefits. However, as a divorcee you do not need to wait until your former spouse claims his or her retirement benefits. As long as your former spouse is eligible to claim retirement benefits, then you may be able to claim divorcee benefits.

For more on the divorcee case, start at our Homepage for Divorced Persons.

Claiming at 66: Usually a Bad Idea for Singles

You may know that claiming benefits at age 66 is popular, second only to claiming benefits at age 62. However, we bet you didn't know the following. For single persons seeking strictly to maximize the value of their lifetime Social Security benefits (in today's dollars), it is usually a bad idea to claim at 66. Some other claiming age is typically better for maximizing the discounted overall value of lifetime Social Security benefits.

We can make an even stronger statement for singles who are less than 65 years old and who are seeking strictly to maximize their lifetime benefits. For such people, claiming at age 66 is always a bad idea. To illustrate, imagine a 61-year-old single woman trying to decide when to claim in order to maximize her lifetime benefits (in today's dollars). Depending on her life expectancy, she should claim benefits between the ages of 62 to 65 or between the ages of 67 to 70--but not at age 66. This applies to those individuals born between 1943 and 1954 with an full retirement age of 66.

We uncovered these surprising results through our careful analysis of the Social Security benefit structure for single persons.