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Recent law changes closed two loopholes that allowed couples claim larger Social Security benefits over lifetime. These strategies were popularized by many financial advisers, including Suze Orman.
The strategy: Typically, in “file and suspend,” one member of a couple would file and claim benefits—allowing his or her husband or wife to begin collecting spousal benefits—and then suspend his or her own benefit—allowing that future benefit to increase.
The change: Under the new rules, when an individual suspends his or her own benefits, not only will all benefits payable to that individual be suspended, but all benefits payable on his or her earnings record payable to other individuals will also be suspended.
What happens: Those who are receiving benefits now under this strategy will continue to receive them. The new rules limiting suspended benefits go into effect 180 days after the budget agreement was signed into law on November 2, 2015. Once that deadline passes, no one will be able to elect this option.
The strategy: At or after an individual’s official FRA
, a person could file a “restricted” application for “just” spousal benefits, while allowing his or her own future retirement benefit to grow.
The change: Social Security will no longer allow certain individuals to restrict an application to spousal benefits only; the individual will be required to file and claim all eligible benefits.
What happens: People age 62 or older at the end of 2015 will continue to have the option of restricting an application to spousal benefits only. People turning 62 in 2016 or later will have to claim all their benefits upon filing.
More information here: https://www.fidelity.com/viewpoints/...security-rules
- File and suspend
The strategy: Typically, in “file and suspend,” one member of a couple would file and claim benefits—allowing his or her husband or wife to begin collecting spousal benefits—and then suspend his or her own benefit—allowing that future benefit to increase.
The change: Under the new rules, when an individual suspends his or her own benefits, not only will all benefits payable to that individual be suspended, but all benefits payable on his or her earnings record payable to other individuals will also be suspended.
What happens: Those who are receiving benefits now under this strategy will continue to receive them. The new rules limiting suspended benefits go into effect 180 days after the budget agreement was signed into law on November 2, 2015. Once that deadline passes, no one will be able to elect this option.
- Restricted spousal benefits (sometimes referred to as “claim now, claim more later”)
The strategy: At or after an individual’s official FRA
, a person could file a “restricted” application for “just” spousal benefits, while allowing his or her own future retirement benefit to grow.The change: Social Security will no longer allow certain individuals to restrict an application to spousal benefits only; the individual will be required to file and claim all eligible benefits.
What happens: People age 62 or older at the end of 2015 will continue to have the option of restricting an application to spousal benefits only. People turning 62 in 2016 or later will have to claim all their benefits upon filing.
More information here: https://www.fidelity.com/viewpoints/...security-rules
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