Should I Care about Social Security's Recent Changes?

If your blood pressure went up when you heard of Social Security’s recent changes (or if it just went up because you didn’t know there were recent Social Security changes!), you’re not alone.

Many of our near-retirement and retiree clients have heard discussions of Social Security claiming strategies on the golf course or in their book club, but don’t know how they impact them. Drastic changes to the available strategies, enacted by the Bipartisan Budget Act of 2015, have increased confusion surrounding the options. The good news is that for some individuals, the claiming strategies will still be available, at least for a period of time. The other good news is that if you are already claiming benefits, these changes will not impact you. The bad news is that you may not know if the preceding applies to you! We can help.

Before we talk about what the strategies are, let’s identify if you qualify to use them. If you will be 66 or older by April 29, 2016, you are still eligible to “file and suspend” your benefit by that date. Keep in mind that just because you’re eligible does not mean it will make sense for your personal situation—but may be worth exploring. The second date is December 31, 2015. If you were 62 by the end of 2015, you can still file a “restricted claim” for spousal benefits, if your personal situation applies.

The “file and suspend” and “restricted claim”  strategies allowed couples to combine two important Social Security facts to get a higher benefit over time—spouse 1 could let their benefit continue to grow while spouse 2 drew benefits on spouse 1’s record. The intent of using either strategy is to increase the cumulative income pulled from the Social Security system.

If you won’t be 66 by April 30th, you won’t be able to trigger benefits for your spouse while letting yours grow. And, if you were not 62 by December 31st, you can’t file a restricted claim. Going forward, if drawing from another person’s record, both persons’ benefits must start together, no picking and choosing.

If there’s one thing that’s clear, it’s that Social Security claiming strategies are complicated enough to make Einstein’s head spin. Whether your age qualifies you for the preceding strategies or not, evaluating your options is still important. Note that there are additional caveats for divorced spouses and surviving spouses.

Evaluating Social Security options in relation to the entirety of a person’s financial life is a key piece of the financial plans we create for our clients. If you have questions about your options, let us help.

For more detailed information about the impacts of these changes and how they may affect your personal situation, click here.