Act Now for Certain Social Security Claiming StrategiesSubmitted by Durbin Bennett on April 4th, 2016
The Bipartisan Budget Act of 2015 created several changes to claiming strategies for Social Security benefits. After April 29, 2016, the option, where one spouse delays benefits while the other collects benefits based on the first spouse’s record, will be gone. You have a limited window in which to take advantage of a special grandfathering of the new law. Also gone is the option of collecting spousal benefits while delaying your own benefits to accrue the delay credits. Because the changes are so significant, we brought in an outside expert to present at a recent client education event – Oscar Garcia with Your Social Security Strategies.
Oscar reviewed how “file and suspend” works along with the criteria for eligibility:
- If you and your spouse were born before May 1, 1950, you are in a “transition” period between the old rules and new rules.
- You must be at least age 66 and at Full Retirement Age (FRA)
- You must act by April 29, 2016 to take advantage of the old rules which could result in thousands of dollars more in benefits.
- File and suspend would be applicable only if you delay filing your own benefit until after FRA and you wish to enable someone else (spouse or child) to receive benefits based on your record, and/or you wish to preserve the ability to file for a lump sum retroactive benefit at a later age, but before you reach age 70.
- During the time of your suspended benefits, you will not receive benefits that you’ve earned nor will you be eligible for spousal benefits via restricted application.
- After you have filed and suspended, your spouse (or eligible child) can claim spousal benefits as soon as they are eligible, starting at age 62.
The “restricted application” strategy was also discussed:
- If your spouse has filed for benefits and you were born January 1, 1954 or earlier, you may have the option of filing a restricted application for spousal benefits based on your spouse’s record, allowing you to delay benefits to a later date.
- If your spouse was born after January 1, 1954, the new rules for filing will apply, eliminating the restricted application claiming option.
Considering the permanent nature of these changes and the closing window to respond, now is the time to act if you think one of these strategies would apply to your situation. You can contact Oscar through his website at http://www.yoursocialsecuritystrategies.com or learn more from http://www.SocialSecurity.gov.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. For more information on Social Security retirement benefits, visit the IRS at: https://www.ssa.gov/retire/.