Popular Social Security Claiming Strategy Gutted in Budget Bill

Kitces, Kotlikoff blast Social Security spousal benefit changes that would end the ‘file and suspend’ claiming strategy.

The budget bill that passed the House on Wednesday and awaits Senate approval has retirement experts railing against a measure in the bill that would kill the “file and suspend” Social Security benefit claiming strategy.

Planner Michael Kitces and Boston University Professor Laurence Kotlikoff both slammed the measures to change Social Security spousal benefits under the deal in their Wednesday blogs. The “file and suspend” benefits claiming strategy allows a spouse to receive benefits while the main beneficiary suspends theirs in order to hold out for a bigger payment in the future.

In his Nerd’s Eye View blog, Kitces said that “it will no longer be possible to file a restricted application for just spousal benefits” under Social Security. “And with an extension of the ‘suspension’ rules that stipulate suspending an individual’s benefits will also suspend any benefits to other people based on the same earnings record, Congress has killed off the various ‘File and Suspend’ strategies to allow spousal and dependent benefits to be paid while still earning delayed retirement credits.”

Kitces notes that new rules under the budget deal, if passed by Congress, “mean that anyone receiving spousal benefits under file-and-suspend would have them terminated next spring.”

Kotlikoff called the changes to Social Security spousal benefits … on Wednesday “devastating.”

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