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What if Congress repeals the File and Spend SSI strategy

Some are saying that the President has requested the 'file and spend' strategy be eliminated as an option for American retirees. This could affect many who are debating their best SSI benefits filing strategy. The question is: Should a 63-year-old Pennsylvania retiree reconsider using the file and spend option to retire at the age of 66, should the retiree wait until the age of 70 or is it wiser to file for SSI benefits sooner than those ages?

First of all, it might be unlikely that this strategy is actually repealed. However, there are three options that a 63-year-old might consider when debating the file and spend strategy if his or her spouse is the higher earner. The first strategy involves the higher earning spouse waiting until the age of 70, in order to receive the highest SSI benefit possible. If the file and spend rule is changed, then the lower income earning spouse will have to wait to apply for spousal benefits until after the higher income spouse applies and until he or she is 70 years of age also. As such, both would need to be 70 years of age before applying for both spousal and retirement benefits.

In the second strategy, the 63-year-old retiree waits until his or her higher earning spouse files retirement at 66. Starting at age 66, the retiree would be permitted to collect spousal benefits; however, the spouse would not receive the delayed retirement credit by waiting until 70 to retire. Later, the lesser earning spouse would file for full retirement at the age of 70 and receive the delayed credit. The third strategy involves the lesser earning spouse applying early for benefits and the higher earning spouse waiting until the age of 70 to receive the maximum available benefit.

Individuals of retirement age considering their options when applying for SSI benefits may wish to analyze their current situation before deciding which strategy is correct for their needs. Every Pennsylvania resident is different one of these options (or a completely different one) could be more suitable. After taking a close look at one's life expectancy, living expenses, savings and other factors, the best retirement strategy will be revealed.

Source: pbs.org, "How to maximize Social Security benefits if Congress targets file-and-suspend strategy", Laurence Kotlikoff, April 28, 2014

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