Social Security Benefit Changes

Changes in the Social Security law was signed into law November 2, 2015.  These changes affect certain strategies that were used to increase basic Social Security income for many people.

There are two major changes to Social Security benefits under the new law. The first is your ability to file a “restricted application,” which is now limited to filers who were at least age 62 at the end of 2015 (born in 1953 or earlier). A restricted application allows you to first claim benefits from a spouse for a time (typically between full retirement age and age 70) and delay your own retirement benefit until age 70 to earn delayed retirement credits of 8% per year. But for folks born after 1953, this option no longer exists.

If you were born in 1953 or before, to submit a restricted application you must be at least full retirement age. That would be age 66 for anyone born between 1943 and 1954.

The second major change affects those who planned to use a “file and suspend” strategy. This tactic has allowed workers, once they have attained full retirement age, to file for benefits but not actually receive anything. The result before now has been this: 1) The worker’s own benefits have continued to earn delayed retirement credits of 8% per year until the worker was age 70, and 2) Because the worker’s benefit record had been activated, any beneficiaries eligible to claim benefits (i.e., spousal) could have begun collecting those dollars.

The new law changes all that. Family members (other than divorced spouses) are no longer able to receive benefits based on the earnings of workers with a suspended benefit. This part of the law takes effect April 30, 2016. The good news is that anyone who was already taking advantage of this strategy before the deadline will not be affected. 

Who is affected?

For questions, contact us.

 

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