Sweeping Changes to Claiming Social Security Benefits

By: Ami S. Longstreet

The budget bill signed on November 2, 2015 by President Obama included sweeping changes in the claiming of Social Security benefits. The changes ended two major Social Security claiming strategies for married couples.

No more file and suspend or restricted application.

If you have not filed for social security benefits within 180 days of the bill’s passage on November 2, 2015 you will no longer be able to use the program’s “file and suspend” rule. This claiming strategy has permitted one member of a married couple to file for Social Security, thereby enabling a husband or wife to file for a spousal benefit. The spouse, meanwhile, could suspend his or her own retirement benefit, which then could grow due to delayed retirement credits by 8% a year.

In other words, the typical file and suspend strategy in which spouse A files for retirement benefits and immediately suspends, to allow spouse B to file for spousal benefits while Spouse A’s retirement benefit continues growing is eliminated.

The changes also will end the ability of anyone not having attained the age of 62 by the end of 2015 to file what’s called a restricted application and collect only a spousal benefit while letting their own retirement benefits rise by 8% a year for up to four years, until age 70. Instead, filing for spousal benefits will be deemed by Social Security to also trigger a person’s own retirement benefit. The agency will pay only an amount that is roughly equal to the greater of the two benefits. Right now, deeming only applies to benefits claimed before age 66, but the new law will eventually extend it to older filers as well.

Exceptions/Opportunities.

Depending on your age, you may have a window of opportunity. If you are at least age 66, you can continue to file and suspend until April 29, 2016. By doing so, your spouse may be eligible to receive benefits after the law becomes effective. Plus you can continue to receive delayed retirement credits for up to four years.

Second, if you are 62 or older as of the end of this year you are grandfathered and will not be subject to the expanded deeming rules. This means that if you filed (or filed and suspended) for your own retirement benefits (or do so in the next six months), your spouse can still file a restricted application for just spousal benefits. But to qualify for this exception, your spouse will need to be at least 62 by the end of 2015.

Survivor Strategies do not change.  Widows and widowers can still file a restricted application for survivor benefits while their own benefit builds delayed credits.

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