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  • Writer's pictureChris Stein, CFP®

Social Security Voluntary Suspension of Benefits

A reader from Colorado looks for clarification on the law regarding voluntary suspension of benefits.

"I read the article "Delaying Your Own Social Security Benefit While Claiming A Survivor Benefit" on your website, written by Mr. Chris Stein. I just ran into a similar problem. I reached FRA, and I tried to suspend my retirement benefit so I could apply for the survivor benefit, but the Social Security Administration said I couldn't. According to them, the law regarding the Voluntary Suspension of Benefits changed. For requests submitted on or after April 30, 2016, you can still voluntarily suspend benefit payments. However, during the voluntary suspension, other benefits payable on the record (such as benefits payable to your spouse) are also suspended, and one cannot continue receiving any other benefits. Could you comment on who is correct and give references to show the SSA they are incorrect? Lastly, if I need a lawyer, would you represent me?"

To tackle the last question first, I cannot represent you because I'm not a lawyer, nor is anyone in our firm.

Unfortunately, I do have to admit that the Social Security Administration is correct. I went back and found the article you mentioned. It was an older article that was written with information prior to the 2016 legislative change that Social Security mentioned. (There was a lot more flexibility in what you could do when you suspended benefits.) I removed the article from the website because it no longer applies.

As Social Security indicated, it is true that once you have started your retirement benefit, you cannot still have others collecting on your record if you voluntarily suspend that benefit. This restriction particularly affects spouses, so if your spouse is collecting on your earnings record and you choose to suspend, the spousal benefit is also suspended.

That used not to be the case, which led to a very popular strategy. People would file and then suspend in what was called the file-and-suspend strategy. The act of filing is what unlocked the door to the spousal benefit, and the spouse had the option of walking through and collecting their spousal benefit. The person with the retirement benefit would suspend immediately to earn delayed retirement credits. In short, their spouse collected the spousal benefit while they earned delayed retirement credits.

The Bipartisan Budget Act of 2015 changed all that, stopping that strategy in its tracks. Some people mistakenly believe that suspension itself is no longer allowed, but that's not the case. Suspension was not affected, but what happens once you're suspended is what changed. You could be grandfathered in, but you had to be in suspension prior to April 30, 2016, for the auxiliary benefits to be payable during your suspension.

The legislation clarified another point. If you turn on your own benefit, Social Security considers that you're still receiving that benefit even if you are in suspension. They're just holding your payments and allowing you to collect delayed retirement credits. As a result, you can't then turn on another benefit. When you push the suspension button, it shuts everything off for you. You can't be collecting another benefit.

In your specific case, the news isn’t good. It sounds like the file-and-suspend strategy would have benefited you. You wanted to suspend your own benefit, earn delayed retirement benefits while simultaneously collecting a survivor benefit, and then turn your benefit back on later. However, since you've already filed for your own benefit, that is not available to you anymore.

You do have the option of switching to the survivor benefit if that is advantageous to you, but otherwise, you can't do what you were trying to do.

Here's some clarity for anyone thinking, "Oh, my gosh, I was planning to collect my survivor benefit, wait to claim my own benefit later and get those delayed retirement credits." (That's called "being paid to wait.”) Usually, when you wait so you can collect delayed retirement credits, you aren't paid any benefit in the interim at all. It's considered the cost of waiting. You forgo the payments so you can receive a bigger payment later.

Well, when people are simultaneously eligible for their own benefit and a survivor benefit, they can actually turn on the survivor benefit independently and leave their own benefit unclaimed. They then claim it later, maybe as late as age 70, with all the delayed retirement credits.

Here's the difference: if you haven't turned on your retirement benefit at all, you're not in suspension. You just haven't claimed it yet. You can absolutely still implement the strategy where you claim a survivor benefit first and then, at 70, switch to your then-maximized benefit – assuming it has grown larger than the survivor benefit. (Sometimes, it doesn't make sense to pursue this strategy, so you'd have to make sure it's right for your situation.)

In your case, you can't follow this strategy because you have already claimed your retirement benefit. You can't 'unclaim' that easily – unless you do a complete withdrawal of application.

Withdrawal could be a potential workaround for you if you can meet the requirements. You would have to act within a year of first claiming your retirement benefit and pay back all the benefits that were paid on your record. I don't have enough details to know if this might be feasible for you.

If it is and if you opt to withdraw your application, Social Security will then act as if you never claimed your retirement benefit. You could then turn right around and claim a survivor benefit, collect that benefit all the way to age 70, and turn on your then-maximized retirement benefit.

Once again, I apologize for that outdated article still being on our website. It somehow slipped past us, but it has been removed so it can no longer mislead people – thanks to you.

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