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  • Writer's pictureChris Stein, CFP®

File and Suspend for Singles

In last week’s blog we discussed several reasons why File and Suspend for married couples was a good idea because it maximizes spousal benefits.  Since the strategy is used mostly by married people, we are often asked why would a single person want to suspend their benefits?  After all, when you suspend your benefits you are essentially telling the Social Security Administration (SSA) to stop paying you money! And with no spouse to assist, where is the advantage to File and Suspend for singles?

Well this blog is all about teaching our readers about the tips, tricks and strategies that may help them maximize their Social Security benefits. And a single person voluntarily suspending their benefits can increase their Social Security benefits using one of two strategies: using Delayed Retirement Credits or File and Suspend.

Delayed Retirement Credits

The first strategy is to benefit from Delayed Retirement Credits. As most blog readers know you can file for benefits any time after age 62. However, claiming before your Full Retirement Age (FRA) will result in a permanently reduced life-time income benefit. That is unless you know about this unique little strategy! Let’s look at an example:

Brian is single and claims his Social Security benefits immediately upon reaching age 62. Four years later, when he is 66 and at his FRA he begins to regret his decision and wishes he was eligible for a larger monthly benefit. Because he is now at his FRA Brian is allowed to suspend his “permanently reduced” benefits. By suspending his benefit he now becomes eligible to receive the 8% annual Delayed Retirement Credits he was previously ineligible to receive because he claimed early!  These credits will be added directly to his benefits allowing them to be increased by as much as 8% annually. Once Brian reaches age 70 he can reactivate his benefits and begin receiving a much higher annual benefit amount.

File and Suspend

The second reason a single person may want to suspend their benefits is to provide flexibility when delaying their benefits until age 70. Once again, an example is the best way to understand this strategy. Lori is 62 and single with no kids. She hopes to delay Social Security until age 70 so she can maximize her life-time benefits. Her biggest fear is she passes away without ever receiving any benefit, or something medically happens to her over the eight year period from age 62 to age 70 where her life expectancy is cut abnormally short. This medical condition could mean she would have been better off claiming for benefits early and not delaying until age 70.

To maximize her benefits, Lori would not claim at age 62. Instead she would wait until her FRA when she is eligible for a claiming strategy known as “File and Suspend” Here she would file and immediately suspend her benefits. This will allow her benefits to continue to grow and earn her 8% annual delayed retirement credits. However, she is now eligible to request a lump sum check from the SSA at any time from her FRA until age 70 for all the benefits she was entitled to receive from her FRA on. So if she were to suffer a medical condition that cuts her life expectancy short she has the flexibility to request all the benefits she delayed receiving!

For more information on why a single person may want to suspend their benefits, and how the two strategies listed here work, please use the  play button below to listen to the audio portion of our blog.

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