Social Security; As if it weren't already confusing - Jason M. Hand
As many of you may be aware, new laws regarding Social Security were signed into law on November 2nd 2015 with the Bipartisan Budget Act of 2015. There has been a lot of confusion on how the new laws take effect starting April 29th, 2016. We hope the information below helps you regarding the decisions of when to take Social Security. If you turn 66 by April 29th,2016 please read carefully and schedule an appointment with Social Security office ASAP or go online. If you turned age 62 prior to the end of the 2015, you are grandfathered into a few of the strategies that we will discuss in this article, for all others I am sorry but there is nothing we can do to help. If you reach full retirement age (66) prior to April 29th of 2016 and have not started collecting, you should file and suspend your retirement benefit. This action will allow your spouse access to half of that benefit if they are at least the age of 62 prior to January 2nd 2016. Here is a look at the changes:
File and suspend
The strategy: Under file and suspend, when a person married turns 66, he or she can claim Social Security but then ask to hold off on getting paid benefits. It’s usually the higher earner. The reason: By taking the official action of claiming the benefits, he/she sets in motion a rule in which his spouse can then claim what are known as “spousal benefits.” Those benefits are a portion of what the husband would receive based on his own working years.
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 on April 30, 2016. After April 29, 2016, no one will be able to elect this option. This is why if you turn 66 prior to April 29th 2016 you must take advantage of this strategy, your spouse must be at least the age of 62 at the end of 2015 for them to claim this strategy at their age of 66.
Restricted spousal benefits (sometimes referred to as “claim now, claim more later”)
The strategy: At or after an individual’s official FRA Opens in a new window, 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. Nothing seems to be required to be completed at this time.
We realize that the information provided is highly technical and likely confusing to many. If you are in doubt, contact us for further explanation or your local Social Security Administration for details. Due to the complexity of the law change this article cannot be construed as reliable or accurate, please verify all details with ssa.gov.
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