Most retirees consider their monthly Social Security check a big part of smart retirement planning. In theory, Social Security seems really simple. You reach age 62 and you can start collecting benefits. Or you might wait until the full retirement age to collect a larger benefit. For an even bigger monthly check, wait until age 70 to collect your monthly benefit. But there are some intricacies of when and how you collect Social Security which can have a huge impact on your lifetime Social Security earnings.
If you start taking your retirement benefits before your full retirement age, your benefits will be at a reduced level. If you continue with your benefits uninterrupted, they will only be increased for inflation. By starting retirement benefits before your full retirement age, you’re sacrificing the larger base payment you might receive if you start benefits at or after full retirement age. If you wait until age 70 to begin collecting, you’ll garner the largest Social Security payment possible. The start, stop, start strategy can allow you to begin collecting earlier, stop, and resume Social Security benefits for a healthy long-term monthly check. (For more, see: Maximize Your Social Security Benefits.)
Larry Kotlikoff, economics professor at Boston University, and Social Security expert named this clever Social Security approach. The start, stop, start strategy allows you to receive a benefit at age 62 for a while and not relegate you to permanently reduced benefits. This approach may be a way to maximize a family’s total lifetime Social Security payments. Here are a few examples that explain the start, stop, start strategy, but it’s best to use a calculator to help understand how this approach might work for you.
You used to be able to collect Social Security benefits at age 62, then suspend benefits and restart them later. Now, if you collect any time before your full retirement age (say, 66), you have only 12 months to change your mind and you have to pay back any monies you received.
Once you reach full retirement age, you can decide to take benefits and then later on (maybe you suddenly got a job) voluntarily suspend them. If you do so, however, any other payments that depended on your benefits (say, to a spouse or child) will also be suspended (see below for more on how changes in "file and suspend" affect spouses). This situation would be viable for someone who gets a job, pension, or additional income after full retirement age– or wants to reduce taxable income between, say, 67 and 70. (For more, see: Tips on Delaying Social Security Benefits.)
Here’s a start, stop, start strategy that may work for married couples where one spouse reaches full retirement age and hasn’t filed for Social Security.
Let’s look at the case of David, age 66 and Jenny, age 62. Jenny files for Social Security at age 62. When David reaches age 66, his full retirement age, he decides not to collect his own Social Security benefits. Instead, David applies for spousal benefits and collects half of Jenny’s retirement benefit. Since David is age 66, he can collect half of the full retirement spousal benefit. He then waits until age 70 to collect his larger benefit on his own account. After age 70, David collects his own larger retirement for the remainder of his life.Since the Bipartisan Budget Act of 2015, this option, also called the "restricted application strategy" is only available to people who were born in 1953 or earlier. (For more, see: How Married Couples Can Maximize Social Security and Am I losing the right to collect spousal Social Security benefits before I collect my own?)
Although a search of the Social Security website for start, stop, start, doesn’t yield any resources, they do have an excellent PDF entitled What Every Woman Should Know. This booklet is invaluable for married couples. It explains the Social Security issues pertaining to lower earning or stay-at-home spouses. The PDF also touches on the start, stop, start strategy, yet doesn't specifically name it. In fact, the Social Security website will answer most of your benefit questions (For more, see: Why Retiring Sooner Might Be a Bad Idea.)
The Bottom Line
How do you know whether to try this Social Security approach? This start, stop, start Social Security strategy is complicated and is in the midst of changing and in some cases, disappearing. The best way to determine whether you should attempt this plan is to talk to a Social Security representative or consult with a qualified financial advisor. Spend some time planning your Social Security strategy to maximize your lifetime retirement benefits. (For more, see: 4 Unusual Ways to Boost Social Security Benefits.)