The Social Security Administration is eliminating two popular claiming strategies people have used for years to optimize their Social Security benefits.
April 29, 2016, will be the last day anyone who has reached Full Retirement Age can file a retirement claim and immediately suspend it—a practice commonly known as “file and suspend.” People would do this primarily so that a spouse or child could receive benefits while the worker continues to earn Delayed Retirement Credits. Taking advantage of this strategy would allow workers to eventually raise the amount of benefits they receive as high as 132 percent while their family members collected a benefit.
Under the new regulation, no benefits will be paid to a spouse or a child who would otherwise qualify, with one exception: a divorced spouse can still receive a benefit even though the worker has suspended his or hers. Workers will still be able to suspend their benefits to receive Delayed Retirement Credits.
Access to Spousal Benefits
In the past, spouses were able to file for their spouse’s benefits without first claiming their own, meaning they would continue earning Delayed Retirement Credits. No longer.
Now, a spouse who was born January 2, 1954, or later will not be able to restrict his or her application to the spouse’s benefits. The Social Security Administration explains why they made this move: “This puts spouses who have exceeded their Full Retirement Age under the same rules that those under their Full Retirement Age have always been under, i.e., the requirement to file first for their own retirement.”
The impact of this second change will be felt starting in January 2020, the date that the first people it impacts will reach Full Retirement Age.
If you’d like to learn more about these changes, visit the Social Security Administration’s site here:
Wescott continues to provide advice on Social Security planning. Contact us here to learn more about how these changes impact your future.