by Matilda Charles
Starting this month, May 2016, changes to Social Security will eliminate strategies seniors have used to maximize benefits. Unlike what some doom-mongers have said, Social Security isn’t going away and our benefits aren’t being cut … there’s nothing radical going on here.
Tucked into the Bipartisan Budget Act of 2015 was language that covers three strategies many of us have used in collecting Social Security:
1) File and suspend – In this strategy, the full retirement-age spouse (age 66 for those born between 1943 and 1954) filed for benefits and then immediately suspended them. The other spouse then claimed spousal benefits while that spouse’s initial benefits accrued for years at an 8-percent annual increase.
No more. Now if one spouse files, he or she must take those benefits or the other spouse can’t claim spousal benefits.
2) Restricted application – In this strategy, the retirement-age spouse filed for spousal benefits, but didn’t collect his or her own benefits, letting the personal benefits sit for years and accrue.
Per the new rules, you can claim one or the other, spousal or personal benefits, but not both. You get the larger of the two, with no changing back and forth, and no deferring benefits until age 70.
3) Suspended benefits – In this strategy, the recipient filed and then immediately suspended payments. If these benefits were suddenly needed down the road, he or she could collect them in a lump sum, but not at the higher monthly rate that the extra time would have afforded.
Per the new rules, there will be no lump-sum payment. The monthly payment will be made at a higher rate.
If your future retirement plans included any of the above strategies, consult with your financial adviser about alternative options.
(c) 2016 King Features Synd., Inc.
