Social Security Changes: What You Need to Know

There are some major changes coming through the social security pipeline, and a few that could impact you! If you are 62 years of age or older before January 1, 2016, there’s a good chance you will want to keep reading. Social security used to provide a major benefit for married couples and divorcees age 62 or older, known as spousal benefits. This benefit was primarily used to increase the income for married couples and divorcees through two popular strategies.

The first strategy, known as file and suspend, allowed the higher earner to file for social security at age 66 (triggering spousal benefits) and then immediately suspend his or her own benefits while the spouse continued to collect spousal benefits. The higher earners’ suspended benefits would grow 8% a year from age 66 to 70, at which point the higher earner would begin taking his or her own social security benefits. This meant that they could defer their own social security, let it earn delayed credits of 8% per year, all while their spouse was taking spousal benefits.

The second strategy, known as restricted application, allowed the spouse of someone already claiming social security to restrict their social security benefits and receive spousal benefits as early as age 66. Their own worker benefits would then grow at 8% a year from age 66 to 70, all while they were collecting spousal benefits. At age 70, they would begin taking their own worker benefit.

Using either of these strategies could boost your cumulative income. Sounds great, right? Well, with the passing of the recent Budget Bill all of this will be changing. Fortunately congress has provided a small window until April 29, 2016 to participate in this strategy prior to its expiration.

If you fit in one of the two groups below you are eligible to benefit from either of these strategies. If that is the case, time is limited to make this potentially significant election.

Group 1: Those born on April 30, 1950, or earlier and, thus, who will attain full retirement age (FRA) by April 29, 2016.
Group 2: Those born between May 1, 1950, and January 1, 1954, who attained age 62 by the end of 2015.

Here’s a summary of how the rules apply to each of the two age groups:
– The file-and-suspend strategy is available to those in Group 1 as long as benefits are filed for and suspended by April 29, 2016.
Restricted applications can be filed and used by those in Group 1and Group 2 if the spouse has already filed for his or her own benefits. To file a restricted application, a person must have attained their full retirement age of 66.

1. Currently married – you and your spouse are age 62 or older by Jan 1, 2016
2. Currently divorced – you and your ex-spouse are age 62 or older by Jan 1, 2016, married for over 10 years and have not remarried since

Next Steps to Apply for Benefits:
– By phone – Call at 1-800-772-1213
– In person – Visit your local Social Security Office. (Call first to make an appointment.)