Two Big Changes in Social Security Benefits Could Greatly Affect Married Retirees

Per the Bipartisan Budget Act of 2015, two strategies that retired, or soon to be retired, married couples have traditionally utilized to maximize Social Security benefits will no longer be available beginning in May 2016.

If you and/or your spouse are approaching retirement, it’s important that you take note of these changes, as they could significantly alter your retirement plans.

“File and Suspend.”

This strategy allowed for spouses, upon reaching full retirement age (FRA) (age 66 for those born between 1943 and 1954), to file to receive social security benefits, but request that payments be deferred until a later date (As late as 70 when receiving Social Security payments become mandatory). This strategy allowed the spouse who filed to grow his or her benefits by 8% per year, while simultaneously making the other spouse eligible to claim spousal benefits based on the earnings record of the spouse who filed.

“Restricted Application.”

By filing a “restricted application,” couples could claim each other’s spousal Social Security benefits while deferring their own, until as late as 70, when they could begin receiving payments based on their own earnings. This strategy allowed couples to receive some Social Security benefits while allowing each of their own Social Security benefits to accrue delayed credits.

Now, there is some good news at the eleventh hour: If you reach full retirement age before May 1st, 2016, then you are still eligible to take advantage of the “file and suspend” option by filing for benefits before the deadline. However, for all others, the “restricted application” option is not longer available. Those who have attained (FRA) before the end of 2015, and implemented either of these two Social Security strategies, will be grandfathered in after the May 1st deadline.