Social Security Maximization

The 2016 Budget Act included many drastic changes to social security claiming strategies, such as filing a restricted application or voluntarily suspending one’s benefits.

Social Security is still an important aspect of one’s retirement and reviewing your claiming options is still suggested prior to electing, as you do not want to make an irreversible decisions! Our software has been updated to reflect all the recent changes and we are happy to run you a maximization report or rerun a report that you have gotten done prior to these changes.

We have highlighted some of the major changes that were made and how this may impact you and your retirement future moving forward. We will continue to stay up to date on more information surrounding these changes, and as always, you can give our office a call with any questions or concerns you may have.

1) Filing Restricted for Spousal Benefits

PRIOR LAW: One used to be able to elect only a spousal benefit at Full Retirement Age, despite having their own earning record and retirement benefit. By delaying the election of one’s own retirement benefit, his or her own benefit could then accumulate with 8%-per-year Delayed Retirement Credits.

NEW LAW: For people born Jan. 1, 1954, or earlier, the option to file a Restricted Application for only spousal benefits will still be available. However, for people born Jan. 2, 1954, or later, this option is phased out. This is expected to happen over the next 4 years.

2) Voluntary Suspension

PRIOR LAW: A lower-earning spouse is eligible for spousal benefits only after the primary wage earner under whose record he/she is filing has filed for benefits. A common strategy under prior law was for the higher wage earner in the couple to file for benefits, then immediately request those benefits be suspended. The checks to the higher wage earner would stop, allowing the higher wage earner’s benefit to grow by 8% per year, increasing not only the retirement benefit, but also the benefit payable to the spouse upon his death. While the benefit was in suspense, the spouse was able to collect a spouse’s benefit.

NEW LAW: The new law causes a Voluntary Suspension to stop all benefits payable under the earnings record of the person whose benefit was suspended. In other words, the spouse will not be able to collect a spousal benefit during the time that the wage earner’s benefit is suspended. This new law is being phased in very quickly. Only people who suspended benefits in the past or within the first 180 days after enactment will fall under the prior law, and they will continue to be able to abide by the old rules until they reach age 70 or un-suspend benefits. People who request a suspension after 180 days of enactment will fall under the new rules. Essentially there is 180 days that are considered “grandfathering” people to this new law.

3) Right now these changes exclude widow benefits!

At this time, widows are still able to restrict an application to only widow or only retirement benefits and later switch to the other benefit.

Please give our office a call 631-393-2888 if you are interested, or if you are looking for guidance in how these change may impact you.

Read the article ‘Closing Loopholes’ featuring Craig J. Ferrantino in Long Island Business News.