I posted yesterday on the foreclosing of some social security claiming strategy loopholes by the recent two-year budget deal negotiated between Congress and the White House.
The claim-and-suspend strategies I have posted about will be eliminated six months from the date President Obama signs the new budget bill.
This means that anyone who begins one of these strategies within six months from the President’s signing of the budget deal will continue to benefit from them.
The loophole will be closed in two stages. First, beginning six months from the date the President signs the bill, if a person claims his full retirement benefits and suspends them, then all checks based on his earnings, including spousal and dependent benefits, will be cut off.
The second stage affects people who turn 62 after this year, i.e., anyone born in 1954 or thereafter. They will no longer have the ability to apply for spousal only benefits at full retirement age. Rather, they will be deemed to be applying for benefits based on their own earnings, or their spouse’s earnings, whichever is higher.
The upshot of this is that after the claim and suspend loopholes are closed it will no longer be possible for both spouses to suspend their own benefits, allowing them to grow until age 70, while at the same time having one spouse collect a smaller spousal benefit check during the suspension period (equal to one-half of the amount of the other spouse’s earned benefit).
Although the claim and suspend loophole will be closed, the survivor benefit is still intact. This means that at the death of the first spouse, the survivor can still collect survivor’s benefits or benefits based on their own earnings, whichever is larger.
It should be noted that a person can still file and suspend benefits, but doing so will not allow a spouse or dependent to receive benefits based on that person’s earnings record during the suspension period. So why would a person want to do this? If you file and suspend benefits, this allows your benefit to grow until age 70. If at any time before age 70 you were to become unexpectedly strapped for cash, such as by suffering a debilitating illness for example, you could resume your benefits retroactively and receive a lump sum. If you don’t file and suspend, the most you can receive is a maximum of six months retroactive benefits.
Information for this post was gleaned from an article on today’s date in the msn.com website’s money section.
(visited October 30, 2015)
As always, a disclaimer is in order. This blog is not intended to give any specific financial advice and the information herein is general and not specific to any particular situation. Because social security claiming strategies can be difficult to navigate, a person should always consult with their financial advisor before implementing any particular plan.
This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.