Medicare Social Security and Planning 3
Unfortunately, you cannot stop your Social Security payments unless it has been 12 months or less since you started receiving rewards or have already reached the FRA. If you do not meet any of these conditions, you will not be able to pause your rewards until you reach your FRA. Hence, be careful when deciding when to claim your reward.
Sometimes you may hear about an old “return” strategy. Previously, you could effectively use your Social Security rewards as an interest-free loan. You can collect rewards in advance, return them and restart your reward at a higher rate as the FRA approaches or reaches. However, in December 2010, the government imposed a 12-month limit to suspend rewards, greatly reducing the use of Social Security as a lending mechanism.
Sometimes a couple decides that presenting and suspending is the best strategy. For this to work, the person who has suspended must have reached his FRA. The strategy may allow the lower-income partner to collect a marital reward, for a full payment of up to 50% of the higher-income partner’s reward, while the higher-income spouse suspends the rewards, accumulating late retirement credits. For example, John and Sue arrived at the FRA. John is eligible to receive $ 2,400 per month from Social Security; Sue will receive only $ 600. To use a file and suspend the strategy, John presents first, which allows Sue to raise $ 1,200 in total between her own reward and the reward of her spouse. After Sue files, John suspends his request. Sue can still receive the $ 1,200 a month even though John has stopped receiving his checks. At 70, when he no longer receives credit for arrears, John reactivates his rewards.
For couples who need additional income but do not want to start Social Security at once, the option of a restricted application may be helpful. In this strategy, one partner claims all the rewards, while the other simply uses the marital reward to take advantage of the spouse’s income. When the person receiving spouse rewards reaches 70, they can switch to Medicare Advantage Plans and a full reward based on their own lifetime income. This technique provides a greater survival reward to the spouse who first came in, as the expecting spouse increased his or her reward value by doing so. However, keep in mind that this strategy only works if the couple applying for marital reward has reached FRA. Otherwise, it is assumed that he is claiming his individual reward in addition to the marital reward and, as a result, the individual reward will be blocked at a lower rate, which nullifies the goal of the strategy.