The controversial file and suspend Social Security strategy that allows spouses to collect spousal benefits between the ages of 66 and 70 ends today. However, there still may be a loophole under the new law.

The current program allows spouses to earn up to roughly $60,000 in spousal benefits if their partner has filed for Social Security benefits – even if her or she has then suspended them ("file and suspend"). The amount spouses receive depends on how much money their husband or wife had earned.

Last year, as part of the budget deal, Congress passed a bill that brings this loophole to an end – today (see How to File and Suspend Social Security Benefits Online Before 4/29 Deadline).

However, according to Laurence Kotlikoff, an economics professor at Boston University and Social Security expert, a loophole remains. The new rule that comes into effect today does not apply to ex-spouses – meaning that divorced people who were 62 before January 2nd of this year can, at the age of 66, ask for a spousal benefit and collect half of their ex-spouse's full retirement benefit, whether their ex is collecting Social Security benefits or not. 

Kotlikoff, who co wrote the book “Get What's Yours: The Secrets to Maxing Out Your Social Security” believes the new rule gives higher-income couples who are heading into retirement an incentive to get divorced. 

In an interview on MarketPlace, Kotlikoff said he "imagines some people are thinking about it," referring to getting divorced to get around the file-and-suspend elimination. When asked if he thought it was wrong to publicize this loophole Kotlikoff said, “I don't think it's reprehensible for people to be uniformly treated under the law.” For more, see Social Security File-and-Suspend: New Guidance Released and Alternatives to Social Security's File & Suspend Claiming Strategy.



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