Social Security Claiming Changes | RKL LLP
Posted on: December 17th, 2015

What Social Security Claiming Changes Mean for You

Financial Advisor Talking To Senior Couple Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015. This action makes retirement planning a little more complicated for people who expected to use these strategies to boost retirement income.

The provision of the budget called “Closure of Unintended Loopholes” primarily addresses two Social Security claiming strategies that have become increasingly popular over the last several years. These strategies, known as “file and suspend” and “restricted application for a spousal benefit,” have often been used to increase cumulative Social Security for married couples.

File and Suspend

Under the old rules, individuals who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and further claim an increased benefit at a later date, up to age 70.

Under the new rules, effective for requests submitted on or after April 30, 2016, the worker can file and suspend and accrue those delayed retirement credits, but no one can collect benefits on the worker’s earnings record during the suspension period. This change effectively ends the “file and suspend” strategy for couples and families. The new rules also mean that a worker can no longer request a lump-sum payment in lieu of receiving delayed retirement credits.

Restricted Application for a Spousal Benefit

Under the old rules, a married individual who had reached full retirement age could file a “restricted application for a spousal benefit” after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits.

Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and spousal benefits, and will receive whichever benefit is higher.

Still Time Left to Use These Strategies

A limited window still exists to take advantage of these two claiming strategies. If you are currently at least age 66 or will be by April 30, 2016, you may be able to use the “file and suspend strategy” to allow your eligible spouse or dependent children to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits.

Social Security Planning Opportunities

The age when you begin receiving Social Security benefits can significantly affect your retirement income and the income available to your survivors. Determining when to file for benefits is one of the biggest financial decisions you’ll need to make as you approach retirement. There’s no “one size fits all” answer – it is an individual decision that must be based on many factors, including other sources of retirement income, plans to continue working and your income tax situation. Married couples need to plan together, taking into account the benefits to which you are each entitled. Although some claiming options are being eliminated, plenty of planning opportunities remain. It’s important to take the time to consider all opportunities and make an informed decision about when to file for Social Security. Contact your financial planning professional to develop a Social Security plan that adheres with your long-term financial goals.

Thomas D. Reardon, CFP®Contributed by Thomas D. Reardon, CFP®, of RKL Wealth ManagementTom works with individual clients and their team of professionals to develop and monitor their investment and financial planning goals. He assists with research and analysis of investment options, financial plan development and design of diversified investment strategies.


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