Mary Beth Franklin

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Mary Beth Franklin on what your clients really want when they talk about retirement.

Some local Social Security Administration offices refuse to process benefit applications

Having problems trying to file and suspend before deadline? You're not alone.

Feb 17, 2016 @ 12:49 pm

By Mary Beth Franklin

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Consumers and their financial advisers are frustrated. Many people who are eligible to file and suspend their Social Security benefits under current rules are flocking to their local Social Security offices to apply for benefits before the April 30, 2016, deadline — only to be told they can't.

Last fall, Congress voted to eliminate two key Social Security claiming strategies for future retirees and on Nov. 2, President Barack Obama signed the Bipartisan Budget Act of 2015 into law.

One strategy on the chopping block is file and suspend, which allows someone who has reached the full retirement age of 66 to file for his or her own retirement benefits and then immediately suspend them. The action triggers benefits for a spouse or other eligible family member while the worker's own benefit continues to grow. It also creates an option to collect a lump-sum payout of suspended benefits.

The second strategy allows a spouse or qualified divorced spouse to claim only spousal benefits at full retirement age — worth up to half of the other spouse's full retirement age benefit amount — while their own retirement benefit continues to grow to the maximum amount at age 70.

There are two separate deadlines and two different groups of people grandfathered under existing rules. To complicate matters further, the Social Security Administration has issued guidance on only one of the changes so far.

As I reported last week, the Social Security Administration issued an emergency message on Feb. 5 to its field offices explaining how to implement changes that will ban future retirees from claiming only spousal benefits at full retirement age. The agency said anyone born on or after Jan. 2, 1954, will lose the right to file a restricted claim for spousal benefits in the future.

The agency has not yet issued any guidance on the file-and-suspend rule that will eliminate the ability of anyone to collect benefits during a suspension and will ban lump-sum payouts. But anyone who is 66 or older before the April 30 deadline will still be able to file and suspend their benefits under existing rules.

Tell that to the Social Security representatives in some local offices.

Will Reynolds, a financial adviser in Fort Collins, Colo., wrote to me about his clients who went to their local Social Security office so the wife, who is 68, could file and suspend her benefits, enabling her husband to claim spousal benefits when he turns 66 in two years. “The Social Security representative refused her request to file and suspend because her husband is not full retirement age,” Mr. Reynolds wrote.

Timothy Wyman, an adviser in Southfield, Mich., described a similar situation. His clients, a 67-year-old husband and 64-year-old wife, wanted to file and suspend the husband's benefits before April 30 to trigger spousal benefits for his wife. The wife plans to claim spousal benefits only when she turns 66.

The claims representative told the couple the husband only needed to file and suspend if the wife was planning on claiming her benefit now. Otherwise, they had nothing to lose by waiting.

Wrong! They would have a lot to lose. Miss the deadline and this couple would forfeit the opportunity to trigger benefits for the wife while his own benefit continues to grow until it is worth the maximum amount at age 70. It's an excellent strategy for married couples since it will also create a maximum survivor benefit for whichever spouse is left behind.

Anyone who is full retirement age has the right to request to suspend his or her retirement benefits that can trigger benefits for a spouse. The spouse does not have to be full retirement age at that time.

As the agency states on its website, “If you have reached full retirement age but are not yet age 70, you can ask us to suspend retirement benefit payments.”

I was so distressed by these and other tales from the trenches that I contacted the Social Security Administration in Baltimore. “Apparently, many people have been told by local SSA reps that they can't file and suspend at 66,” I wrote. “I'm not sure what is going on, but I thought I'd let you know.”

Apparently, I am not alone. Boston University professor Laurence Kotlikoff, who also writes about Social Security claiming strategies, detailed similar horror stories and his attempts to get the agency to issue clearer guidance in his weekly column.

My solution: Bypass the local office. Have your clients file for their Social Security benefits online. They should state that they want their benefits to start at 66 (or as soon as possible if they are older than full retirement age). In the remarks box at the end of the application have them write: “I want to suspend my benefits.” Someone from SSA will contact them within a few days to verify all the information before they process the application.

Mary Beth Franklin is a contributing editor to InvestmentNews and a certified financial planner.


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