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Social Security Options Changing for Married Couples

As of May 2016, two popular social security claiming strategies are being eliminated due to the Bipartisan Budget Act of 2015, signed into law by President Obama. These two popular strategies for married couples are known as “File and Suspend” & “Restricted Claims/Application”.

These strategies have been used across the country by couples looking to receive an extra benefit for a few years. “File and Suspend” allows the higher earning spouse (Spouse A) to file for Social Security benefits at their full retirement age and then immediately suspend the benefits to allow it to continue to grow, while Spouse B files for spousal benefits on Spouse A’s record. Spousal benefits are ½ of Spouse A’s full benefit. At age 70, Spouse A can start to claim their now enhanced full benefit.

Often used hand-in-hand with “File and Suspend” is “Restricted Application.” To continue the example we are using above, instead of filing for spousal benefits, Spouse B can file for “Restricted Application.” While collecting spousal benefits, Spouse B’s own benefits continue to grow. At Spouse B’s age 70, they can then file to switch to collect on their own earnings record, now with an enhanced benefit.

If done correctly, both spouses will collect an enhanced benefit at their own age 70, while Spouse B collected spousal benefits from their full retirement age through age 70.

So what exactly changed?

With the signing of the Bipartisan Budget Act of 2015, it will no longer be possible for file a restricted application for just spousal benefits. Moreover, if you file and suspend your benefits, you will be suspending benefits of any individual collecting under your record. Therefore, Spouse B would not be able to collect spousal benefits after Spouse A suspends nor would Spouse B be able to file for restricted application.

On a positive note, there is still some time for people to do these strategies! The changes go into effect on May 1, 2016. For those who are reaching their full retirement age by April 30, 2016, there is still time to take advantage of the current “File and Suspend” rules and be grandfathered in to use that strategy. Additionally, if you turned 62 by the end of 2015, you were grandfathered into the prior “Restricted Application” rules.

If you would like to discuss this further, please contact Condor Capital Management. We would be happy to discuss social security claiming strategies in more detail, as well as assist in coming up with the best plan for retirement income using all of your assets properly.