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 of these ages, I would highly recommend taking another look at your social security strategy to make sure it is aligned with the new laws. The decision about when and how to take benefits is one of the most significant financial decision a person makes in their lifetime because it impacts your income for the rest of your life and the life of your spouse.
If you or your friends/family members are in a position where you will have to make these choices, we would be happy provide advice at no cost. Simply call 417-299-5281 to schedule an appointment.
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Interested in learning more? Contact Auxan Capital Advisors, LLC to talk to a financial advisor Springfield MO to learn more about retirement planning and wealth management!
The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
I became disabled 25 years ago and I draw disbility. I’m 64 and my husband is 60. He is still working and I was wondering if I can draw on his social security!
Hi Judy, unfortunately you will not have the option to receive spousal benefits. When you reach full retirement age (66), your disability benefits will automatically be converted to retirement benefits at the same amount. You do have the option to suspend your benefits at age 66, and each year you delay your benefits increase by 8% per year. For instance, if your benefits at full retirement age are $1,000 per month, you have the option to stop taking benefits for 4 years, and then when you turn 70 you would receive 1,320 per month (4 years times 8%) rather than $1,000.