menu › Investor Solutions | Good Move | Call Now: 1.800.508.8500 | Your goals. Your needs. Our mission
phone 1.800.508.8500
Knowledge Center

share this article download pdfprint

Act Now To Claim This Valuable Social Security Benefit: Time is Running Out

By: Louis Feldman

Introduction

If you are eligible, don’t miss this very valuable benefit. Call us for a complete analysis of your Social Security Options.

For individuals who will turn 66 by April 29, 2016 (those born before May 1, 1950), there is still an opportunity to get your Social Security benefits under the old system of leveraging both file and suspend and restricted application strategies.  

Background: It was too good to last

Social Security claiming strategies have been changed forever with the passage of the Bipartisan Budget Act of 2015 (the “Act”) signed into law on November 2, 2015.  With it, several popular Social Security claiming strategies were eliminated, and as such, it has become more important than ever that you plan your Social Security claiming strategies in order to maximize your benefits, while also identifying potential retirement income shortfalls which may be incurred as a result of these changes.

The Act eliminated two of the most popular Social Security maximization strategies; “file and suspend”, and “restricted application” strategies.  As of today, the file and suspend and restricted application strategies are still available for some married couples, but the clock is ticking.  There is a 180 day grace period for the effective date of the Act, so the file and suspend strategy will be available for a short period of time for certain individuals in 2016.  Moreover, restricted application also will not immediately be eliminated, so certain individuals will still be able to file a restricted application when they reach Full Retirement Age (“FRA”). 

For individuals who will turn 66 by April 29, 2016 (those born before May 1, 1950), there is still an opportunity to get your Social Security benefits under the old system of leveraging both file and suspend and restricted application strategies.  

Generally, the file and suspend claiming strategy permits you to file for your own Social Security benefits at full retirement age, and then suspend the benefit in order to receive the 8 percent delayed retirement credit which equates to an additional 32% over four years period.  After April 29, this opportunity will cease to exist.  This creates urgency for those individuals to take advantage of this strategy before it becomes unavailable.  Unfortunately, those individuals who reach their FRA after April 29, 2016 are out of luck.

Next, for certain individuals turning 66 after April 29, for those born between May 2, 1950 and January 1 1954, although they can no longer use the file and suspend strategy, the filing of a restricted application remains an available option.  Once you reach FRA for those born during this period, you may apply for a restricted benefit based on your spouse’s earnings as long as the earner is already receiving benefits.  Even if you are the higher earner, you may instruct Social Security to restrict your benefit to your spouse’s earnings, which means you are entitled to receive up to 50 percent of the benefit your spouse is receiving.  This strategy enables you to earn delayed retirement credits up until age 70, at which time you can switch to your own benefit.  Remember, this option is not available prior to FRA.

Finally, for those individuals born after January 1, 1954, they can no longer use either the file and suspend or restricted application strategies.

Conclusion: Act Now

As a result of the Act, it is crucial that a thorough evaluation and analysis of Social Security claiming strategies be done as part of your comprehensive retirement income strategy in order to provide the best results in retirement.  The difference between a poor strategy and a well thought out strategy can be hundreds of thousands of dollars in retirement income over a couples’ joint lifetime.  If you or anyone you know is between ages 62 and 70, feel free to contact us so we can help evaluate the optimum Social Security strategy to maximize the lifetime benefits. 

Written By: Louis Feldman, JD, CPA, CFP, PFS