Social Security ‛Start, Stop, Start’ Strategy, Explained

The Social Security benefits claiming strategy known as “start, stop, start” was scaled back for individuals and eliminated for married couples following the Bipartisan Budget Act of 2015. Here’s a look at how it may still maximize benefits for some individuals and the way it used to work.

Maximizing Social Security Benefits

Most retirees consider their monthly Social Security check a big part of retirement planning. To some, Social Security might seem simple. Age 62 is when you can start collecting benefits. If you wait until normal (or full) retirement age (age 67 if you were born in 1960 or later), you can collect your full benefits. For an even bigger monthly check, wait until age 70. But there are some intricacies of when and how you collect Social Security that 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 get your largest possible Social Security benefit.

How “Start, Stop, Start” Works

Larry Kotlikoff, an economics professor at Boston University, named the “start, stop, start” Social Security approach. The strategy allowed you to receive a benefit at age 62 for a while, suspend benefits, and then resume them again later.

The decision to postpone receiving benefits past full retirement age will result in delayed retirement credits. Your benefits will grow 8% each year you postpone taking them until you reach age 70. (There’s no incentive to postpone past age 70.)

This approach may be a way to maximize lifetime Social Security payments for some, but there are caveats. It’s best to use a calculator, such as the one provided by the Social Security Administration, to help understand how this strategy might work for you.

Prior to the Bipartisan Budget Act of 2015, individuals used to be able to collect Social Security benefits at age 62, suspend benefits, and restart them later. Now, if you collect any time before your full retirement age, you have only 12 months to change your mind—and if you do, you’ll have to pay back the monies received. In addition, you can only do this once, and it is considered a withdrawal of benefits by the Social Security Administration.

There is another option. If you have received benefits for more than one year and are no longer eligible for withdrawal of benefits, you are allowed to suspend benefits once you reach full retirement age. Delayed retirement credits will accrue annually until you resume taking benefits or reach 70.

The above scenarios would be viable for someone who initially needs the benefits, but later gets a job or an unexpected windfall, for example.

Married Couples Lose a Strategy

A version of the “start, stop, start” strategy that applied to spouses, known as “file and suspend,” was phased out and ultimately eliminated by the Bipartisan Budget Act of 2015.

It maximized benefits for married couples where one spouse reached full retirement age and hadn’t filed for Social Security. In essence, it allowed one spouse to collect a spousal benefit and delay their own benefits, which continued to accrue delayed retirement credits.

Here is an example of how it worked, for a married couple named Antonia and David. At age 62, Antonia files for Social Security. 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 Antonia’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 start collecting his larger benefit on his own account. From then on, David collects his own larger retirement for the remainder of his life.

The Bottom Line

The “start, stop, start” claiming strategy is complicated. The best way to determine whether you should attempt this plan is to talk to a Social Security representative or a financial advisor. Spend some time planning your Social Security strategy to maximize your lifetime retirement benefits.