Important Social Security Claiming Strategy Changes

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The Bipartisan Budget Act of 2015 impacts two important claiming strategies: "Restricted Application" and "File & Suspend."  

WHAT'S CHANGING:

Restricted Application Strategy

The first change will limit use of this strategy. If you haven't reached age 62 by the close of 2015, it will no longer be possible to file a restricted application to receive spousal benefits (based on someone else's earnings record) while delaying your own retirement benefit (based on your own earnings record). Instead, an application for any Social Security benefit will be deemed to be an application for all benefits you might be entitled to, and you will receive the highest benefit you are eligible for. 

However, if you are already 62 or older on December 31, 2015, these changes do not apply to you. In other words, if your date of birth is before January 2, 1954, you will still be able to file a restricted application when you reach full retirement age to receive spousal benefits (to receive benefits based on your spouse's earnings) while deferring your own retirement benefit (based on your own earnings record).

File-and-Suspend strategy

The second change will limit (but not eliminate) advantages of using this strategy. In the future, if you voluntarily suspend receiving a Social Security benefit, this will also mean that while your benefit is in suspense: 

  • No one else can draw benefits based on your earnings record
  • You cannot simultaneously draw benefits based on someone else's
    earnings record

If you are already eligible to file-and-suspend (or will be eligible before May 2, 2016), there is a limited time during which you can still choose to suspend your own benefit (in order to be eligible for a larger benefit later) without affecting a spouse's, ex-spouse's, or child's eligibility. Also, if you elect to suspend benefits on or before April 30, 2016, this should preserve your ability to request a retroactive lump sum if you change your mind prior to attaining age 70. After April 30, 2016, these planning opportunities will disappear. (...) 

If you have any concerns regarding social security claiming strategies or questions about your financial situation, please contact Marlis Gilbert, our Chief Planning Strategist, by calling 515-270-6444.