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New Law Changes Social Security Claiming Strategies

In a January 25th 2013 blog I explained how to maximize your Social Security benefits by using the restricted application claiming strategy . Unfortunately, this strategy is no longer available for most people due to new legislation being passed by Congress in  October in 2015.

New Rules

Under the new legislation, it is no longer possible to file a restricted application for just spousal benefits. The new “suspension” rules stipulate that suspending an individual’s benefits will also suspend any benefits to other people based on the same earning record. In other words, Congress has killed off the “file and suspend” strategies to allow spousal and dependent benefits to be paid while still earning delayed retirement credits. Fortunately the new rules do not take effect immediately and you may be qualified for the grandfather rules.

Grandfather Rules

If you belong to one of the following groups, then you are eligible for the grandfather rules:

  • Already receiving benefits: not affected by the new rules.
  • Age 65 ½ or older by Oct 30, 2015: if you want to file and suspend, you must do so by April 30, 2016 in order to allow your spouse to file a restricted application (if he/she also qualifies for the grandfather rules). You are eligible to file a restricted application for spousal benefits if your spouse is already receiving benefits or has already filed and suspended benefits.
  • Age 62 or older by 2015: You can’t file and suspend but if your spouse is already receiving benefits or has filed and suspended, you can still file a restricted application at full retirement age even if the filing doesn’t occur until years from now. This will enable you to collect spousal benefits at full retirement age and let your future benefit grow.

Michael Kitces put together a good in his blog for the effective dates and claiming deadlines for various scenarios.

Time to Review Your Situation

The next month or so is an important transition period that merits a closer look at your Social Security claiming strategies if you and/or your spouse have already reached full retirement age, or will before April, 2016. Don’t miss out on this window of opportunity!