News & Events

Social Security Changes: What You Need to Know

For married couples, the ability to coordinate Social Security claiming strategies can boost lifetime benefits. This ability to coordinate benefits is going away this spring as a result of the Bipartisan budget Act of 2015.

The file and suspend strategy allows a wage earner who is at full retirement age or older to file for benefits and then immediately suspend them. This allows the spouse to then collect benefits worth up to half of the spouse’s full retirement age benefit while the wage earner’s benefits continue to grow by 8% per year, up to age 70.

In addition, the file and suspend strategy allows the wage earner to change his or her mind anytime before age 70 and request a lump-sum payment of all the suspended benefits, rather than collecting the increased retirement benefits.  This strategy can be useful for unmarried individuals who are waiting to collect higher benefits but experience a financial or health condition change.

Beginning May 1, 2016, the file and suspend benefits will operate differently.  No family members will be allowed to collect benefits during the suspension period and the lump sum payment of suspended benefits will no longer be permitted.

If you are going to be age 66 or older by April 30, 2016, you have the ability to file and suspend and take advantage of this claiming strategy, as well as preserve the option to request a lump-sum payout up until age 70. After April 30th this option will no longer be available. If you were married and 62 by December 31, 2015, there is a four-year phase in to file a restricted claim for spousal benefits. Anyone 62 or older retains the right to claim only spousal benefits when they turn 66 and switch to their own larger retirement benefits at 70.

Many times file and suspend strategies are not the most favorable strategies when it comes to claiming Social Security benefits and you need to consider all the strategies in conjunction with your own financial plan. But, it is important to know that this option is set to expire, and if you are eligible before April 30, 2016 you may wish to explore this further.

For more information, please contact Jason Archambault at 401-752-0578.