The Must-Know Tactic to Boost Your Social Security Benefits

African American woman counting money in kitchen
Alamy

An innovative strategy called "file and suspend" can help you get more Social Security benefits for your family and give you the chance to increase those benefits down the line.

%VIRTUAL-WSSCourseInline-792%The strategy takes advantage of two aspects of the Social Security system to get your family more benefits than you'd otherwise be entitled to receive. It allows you to get spousal benefits for your spouse early in retirement, but it also allows you to let your own benefits based on your work history grow, providing some key long-term advantages.

As background, married couples are entitled to receive either regular retirement benefits based on their own work history or spousal benefits based on the work history of their spouse. In general, one spouse can claim a spousal benefit equal to half of the regular retirement benefit of the other spouse. You're not entitled to both, so it's important to decide which will give you the better deal. For couples in which both spouses earn roughly the same amount, usually regular retirement benefits make the most sense. For single-earner families, spousal benefits play a much more vital role.

First You File; Then You Suspend

The problem is that you're not allowed to claim spousal benefits unless your spouse has filed for a regular retirement benefit. That's where the "file" part of the file and suspend strategy comes in: By having the higher-earning spouse file for benefits, it allows the other spouse to claim a spousal benefit.

Next, the "suspend" part of the strategy comes into play. If the higher-earning spouse simply files without suspending, then the family will receive two benefits: the regular benefit of the higher earner and the lower spousal benefit of the other spouse. In some cases, that works fine.

But in other cases, the higher-earning spouse might prefer to delay taking Social Security until later in retirement. From age 66 to 70, each year you wait adds 8 percent to your monthly benefit amount. Moreover, it also adds the same amount to what your spouse will receive in survivors benefits after you pass away. Those increases last for the rest of your joint lives, making it worth the delay for many couples.

As long as you're at full retirement age or above -- currently age 66 -- you can file for your benefit but immediately suspend it, allowing it to keep growing despite the fact that your spouse is receiving a spousal Social Security benefit. Later on -- but no later than age 70, because that's when the credits you get for delaying top out -- you can start receiving your benefit at its higher future amount.

Don't Get Greedy

One thing many people get confused about is why both spouses shouldn't file and suspend. On its face, you'd think you could get double benefits that way.

But Social Security doesn't let you double-dip. Only one spouse can use the file and suspend strategy, so figuring out which one does your family the most good is critical to getting the most from the strategy.

You can follow Motley Fool contributorDan Caplingeron Twitter@DanCaplingeror onGoogle Plus. Motley Fool retirement experts have created a free report on a simple strategy totake advantage of a little-known IRS rule to boost your retirement income.

This content is not available due to your privacy preferences.
Update your settings here to see it.