In the last couple of weeks new laws have been passed that make sweeping changes to social security rules that affect how and when a person can take their benefits. In short, these changes eliminate some of the strategies that couples have previously been able to use to increase the amount they receive during retirement. Here is who is affected:
If you are not 66 years old by May 1, 2016, you will not be able to use the “file and suspend” strategy. This is a strategy whereby one spouse receives spousal benefits from ages 66-70 while the other spouse suspends his or her benefits until age 70 to receive a higher monthly amount. If you have turned 66 before that date and you haven’t yet started taking benefits, then you need to act, before April 30th, in order to be grandfathered into the current system.
If you are not 62 by the end of 2015, you will no longer be able to file a “restricted application” for benefits. Most individuals have the option to either take spousal benefits or receive benefits based on their earnings. If a person takes spousal benefits during their 60s (even if they are a lower than their own benefits), that allows their own benefits to continue to bump up each year, so that the person can then switch to benefits based on their earnings at age 70 at a much higher amount. The new law eliminates that choice if you are under the age of 62. Instead, if you apply for benefits you will automatically receive whichever is higher between the spousal benefits verses your own benefits.
If you have already done some planning for social security and fall under either one […]