Understanding Your Social Security Benefits; Changes April 2016

SSA ChangesRecently, enjoying a dinner out with good friends, I learned my girlfriend’s husband was about to turn 66.  I tried to focus on the fabulous dinner, but honestly, I was thinking, “What are your plans for claiming Social Security benefits?”  A financial planner plans in so many environments, not just in the office!

When the time was right, I asked!  He told me he had done nothing yet.  He thought he would figure it out “at some point.”  I knew my girlfriend’s 66th birthday was approaching, and I got to thinking…  She is still eligible for a spousal benefit!  How exciting!  All I had to do was ask him to File and Suspend by April 29th, and then she can get ½ of his benefit when she turns 66.  Claiming strategies are complicated!

Social Security benefit basics:

  • We are eligible to receive 100% of our Social Security benefit at our Full Retirement Age (FRA).  Our FRA depends on our year of birth.  Check your FRA here.
  • We can start our benefit at age 62, but this is generally not in our best interest!
  • We can delay our benefit to age 70, and receive a benefit bump of 8% for each year. Nice incentive!

Slightly complicated part

Social Security rules allowed a lower earning spouse to receive 50% of the higher earning spouse’s benefit upon reaching Full Retirement Age.  If the higher earning spouse starts their benefit, then s/he misses out on the 8% gain each year to age 70.  Here is where File and Suspend was so great!

Nice perk if you can get it

Higher earning spouse uses File and Suspend to file for his/her benefit, but suspends receiving the current benefit.  The spouse files a Restricted Application so that s/he can get a 50% spousal benefit, allowing “higher earner’s” to grow at 8% per year to age 70.

As part of a recent budget deal, effective April 30, 2016 two Social Security claiming strategies will be eliminated: File and Suspend and the Restricted Application for spousal benefits.  This change could be one of several in an effort to enhance the Social Security program’s solvency.

Can I still get the spousal benefit?

We perform a thorough analysis to make sure our clients don’t miss out on this spousal benefit ending April 30th.  However, if you have friends who are: Married? Not yet receiving SSA benefits? AND born before May 1, 1950? AND have a lower earning spouse born before January 1, 1954?  They may be eligible for spousal benefits.

P.S. My inspiration for this story made an appointment with the Social Security Administration, enacted the File and Suspend strategy and my girlfriend will receive over $1,000 monthly, once she turns 66. She is thrilled!

For those of us born after January 1, 1954, SSA benefits will be simpler.  Our benefit will only depend on when we want to start our benefits, no spouses involved.  Still, an analysis of when to begin benefits is important.  Ask us!

Laurie Dubchansky
Guest Post by Laurie Dubchansky

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