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File-And-Suspend: A Social Security Strategy Under Fire

At HFA, our clients ask many questions about Social Security – should I (or we) begin to collect it at age 62, wait until full retirement age or wait until 70?  Some of you may be aware of an alternative strategy known as file and suspend, which may allow a couple or individual to collect more lifetime benefits than the traditional method.

In any event, the strategy is now potentially at risk and we thought you should know more about it.  So, we found an interesting article on this topic, recently written by Mark Miller of Reuters – hope you find it interesting as well!

Article written by Mark Miller

Are high-income Americans gaming Social Security? The Obama administration wants to go after the wealthy for “aggressive” moves to “manipulate” their Social Security claiming decisions, according to the fiscal 2015 budget released by the White House earlier this month.

The administration hasn’t offered much elaboration, but a White House official, speaking on background, confirmed that the target is a benefit claiming strategy known as file-and-suspend — a twist on the more straightforward strategy of delayed filing to earn a higher monthly benefit down the road. Although it’s technically available to anyone, the White House thinks the strategy is being used to unfair advantage by high-income seniors and wants to shut it down because of the added benefit cost it imposes on the Social Security program.

Any change to file-and-suspend would require congressional action, so don’t expect anything soon. But words like “aggressive” and “manipulate” are unusually strong for a federal budget document, so let’s look at what file-and-suspend is about – how it’s used and whether it makes sense to target it for elimination.

Click here to read the full article!