Bipartisan Budget Act of 2015 included a section titled “Closure of Unintended
Loopholes” that ends two Social Security claiming strategies that have become
increasingly popular over the last several years. These two strategies, knows
as “file and suspend” and “restricted application” for a spousal benefit, have
often been used to optimize Social Security income for married couples.
you have not yet filed for Social Security, it’s important to understand how
these new rules could affect your retirement strategy.
on your age, you may still be able to take advantage of the expiring claiming
options. The changes should not affect current Social Security beneficiaries
and do not apply to survivor benefits.
the previous rules, an individual who had reached full retirement age could
file for retired worker benefits – typically to enable a spouse to file for
spousal benefits – and then suspend his or her benefit. By doing so, the
individual would earn delayed retirement credits (up to 8 percent annually) and
claim a higher worker benefit at a later date, up to age 70. Meanwhile, his or
her spouse could be receiving spousal benefits. For some married couples,
especially those with dual incomes, this strategy increased their total
combined lifetime benefits.
the new rules, which are effective as of April 30, 2016, a worker who reaches
full retirement age can still file and suspend, but no one can collect benefits
on the worker’s earnings record during the suspension period. This strategy
effectively ends the file-and-suspend strategy for couples and families.
new rules also mean that a worker cannot later request a retroactive lump-sum
payment for the entire period during which benefits were suspended. (This
previously available claiming option was helpful to someone who faced a change
of circumstances, such as a serious illness.)
If you are age 66 or older before the new rules take effect, you may still be
able to take advantage of the combined file-and-suspend and spousal/dependent filing
the previous rules, a married person who had reached full retirement age could
file a “restricted application” for spousal benefits after the other spouse had
filed for Social Security worker benefits. This allowed the individual to
collect spousal benefits while earning delayed retirement credits on his or her
own work record. In combination with the file-and-suspend option, this enabled
both spouses to earn delayed retirement credits while one spouse received a
spousal benefit, a type of “double dipping” that was not intended by the
the new rules, an individual eligible for both a spousal benefit and a worker
benefit will be “deemed” to be filing for whichever benefit is higher and will
not be able to change from one to the other later.
If you reached age 62 before the end of December 2015, you are grandfathered
under the old rules. If your spouse has filed for Social Security worker
benefits, you can still file a restricted application for spouse-only benefits
at full retirement age and claim your own worker benefit at a later date.
Social Security claiming options remain unchanged. You can file for a
permanently reduced benefit starting at age 62, receive your full benefit at
full retirement age, or postpone filing for benefits and earn delayed
retirement credits, up to age 70.
some claiming options are going away, plenty of planning opportunities remain,
and you may benefit from taking the time to make an informed decision about
when to file for Social Security.