Protective File and Suspend Social Security Strategy

A few weeks ago, we discussed the fact that a claim for Social Security benefits can be backdated by up to 6 months (but no earlier than full retirement age), thereby resulting in a) a lump-sum payment for 6 months of benefits and b) a lower ongoing monthly benefit, as if you had originally filed at that earlier date.

This can be helpful as a way to effectively change your mind (e.g., in the case of an unmarried person who originally chooses to delay benefits, but who later finds out that his/her life expectancy is shorter than originally believed, thereby making an earlier application for benefits more appealing).

In the case of retirement benefits though, there’s an even more powerful “change your mind” strategy available — one that isn’t limited to just 6 months.

How the Strategy Works

If a person has filed for retirement benefits and has asked for those benefits to be suspended, he/she can later unsuspend and ask to have all or some of the benefits from the date of suspension onward paid as a lump sum. And this person’s ongoing monthly benefit would then be reduced as if he/she had originally started receiving benefits on that earlier date.

In other words, this is a way to retroactively “change your mind,” all the way back to full retirement age if you filed and suspended right away at full retirement age. (Note, however, that the date on which you change your mind must be before age 70, otherwise you will have already asked to unsuspend payments.)

Because of this ability, filing and suspending as a sort of protective action can make sense for some people. For example, an unmarried person who plans to wait until age 70 to take retirement benefits should probably go ahead and file and suspend at full retirement age, just to preserve the opportunity to change his/her mind later. (Ditto for a spouse in a married couple who does not plan to take retirement or spousal benefits prior to age 70.)

To be clear though, some people should definitely not be doing this. Specifically, for a spouse in a married couple who plans to file a restricted application at full retirement age (i.e., an application for spousal benefits only), it’s important to not file for your own retirement benefit until you actually want to start receiving it.

Technical note: For anybody interested in the applicable Program Operations Manual System (POMS) reference, it’s here (under “B. PROCEDURE — CLAIMANT REQUESTS RESUMPTION PRIOR TO AGE 70”). The key point is that the effective month of reinstatement of benefits can be any month during the suspension period. This topic is not covered in the actual Code of Federal Regulations, as far as I can tell.