Social Security Changes – Claiming Strategies Closing
Social Security is changing in 2016. Congress is limiting and ultimately phasing out some existing claiming strategies for married couples. These changes, which allowed you maximize benefits, will take effect less than 5 months from now.
Do the changes apply to you?
- If you are nearing 66, there is a short transition period where you can still qualify for the outgoing strategies.
- If you are currently receiving benefits under these strategies, you will continue to receive them.
- If you were born in or after 1954, the changes will automatically apply.
More detail on the changing strategies:
- Restricted Application
Before: At or after you reached your full retirement age, you had the option to file a restricted application to collect your spousal benefit based on your spouse’s earnings record; this allowed you to delay and grow your own benefits until age 70 at 8% per year.
After: If you were born after 1953, you will not have the option to restrict your benefits to spousal benefits when you file if you are entitled to benefits based on your own earnings record. Instead, you will be “deemed” to have filed for the highest benefit.
Transition through December 2015: If you are 62 or older by the end of 2015, you will be grandfathered and the change does not apply to you. At your full retirement age you will still have the option to file a restricted application based on your spouse’s earning record and later switch to your own maximum benefits. To take advantage of this, your spouse must already be claiming and receiving his/her own benefit at that time.
- File and Suspend
Before: At or past your full retirement age, you could file for benefits under your own earnings record and immediately suspend receiving them – allowing your spouse or dependent to collect based on your record. The strategy also allowed your own benefits to increase at 8% until your maximum benefits at age 70.
After: For your spouse or dependent to receive benefits, you will need to file AND receive your own benefits, forgoing delayed retirement credits. If you suspend benefits, all spousal and dependent benefits will also be suspended.
Transition through April 30, 2016: If you want to file and suspend, you can do so until April 30, 2016, provided you will reach full retirement age (66) by then and your spouse will be at least 62. After this date, if you choose to suspend your benefit, the spousal benefit will also be suspended.
Should you take action?
If you believe that the file and suspend strategy makes sense for you, you must act by April 30, 2016. Again, this only applies to couples between the ages of 62 and 66 by April 30, 2016 who have not applied for benefits yet.
Confused or unsure?
Please don’t hesitate to reach out to us; we are more than happy to help you figure out the best option for you and your family.