This Loophole Could Be Worth an Extra $30K in Social Security Benefits

social security spousal benefits

Forget tax day — April 29 could be a much more important deadline for married baby boomers.

Because of the Bipartisan Budget Act of 2015, an often-overlooked Social Security loophole will stop accepting new applications at the end of this month.

The “file and suspend” option allows 66-year-olds to file for Social Security, but delay their payments and allow their spouses to receive “spousal benefits” in the meantime. The spouse must be at least 62 at the time of application.

Why would anyone bother? It could help you — or your parents — get thousands of dollars more in the long run.

Why Baby Boomers Should Use Social Security Spousal Benefits

Chicago Tribune reporter Gail MarksJarvis explained it best:

Under file and suspend, when a married person turns 66, he or she can file to claim Social Security benefits but then ask to hold off on getting paid benefits. It’s usually a husband. The reason: By taking the official action of claiming the benefits, he sets in motion a rule in which his spouse can then claim what are known as “spousal benefits.” Those benefits are a portion of what the husband would receive based on his own working years.

Why go through all this?

For each year you delay your Social Security payments, your benefits increase about 8%. Your Social Security benefits at age 70, for instance, are almost guaranteed to be higher than if you started drawing payments at age 66.

This strategy could help some couples get $30,000 more in Social Security, one financial planner told the Tribune, though the amount depends on your income and how many years you paid into the program.

If you don’t apply by April 29, you can still start drawing Social Security payments any time after age 66, but there won’t be a spousal benefit to cash in.

You can start drawing Social Security payments as early as 62 years old or as late as 70, but the longer you wait, the bigger benefit you’ll receive.

Are You or Your Parents Eligible?

Not only are tons of baby boomers just figuring out this legit loophole exists, but some Social Security workers are just catching on, too.

MarksJarvis explained many eligible couples had recently been denied spousal benefits because agents weren’t clear on how the program is administered — so if you or your parents have been denied, it might be worth checking again.

To find out if you or your parents are eligible, visit the Social Security Administration’s online retirement planner.

Your Turn: Will you try to cash in on this benefit before it expires?

Lisa Rowan is writer, editor and podcaster living in Washington, D.C.