Will Social Security Changes Affect Our Plans?
Q: My husband and I are both 65 and won’t turn 66 until later in 2016. I’m entitled to a monthly benefit of $810 at 66, and my husband a benefit of about $2,300. He originally planned to “file and then suspend” his benefit at 66 and continue working until age 70 while his benefit grew. Meanwhile at 66, I was hoping to take a spouse benefit based on his earnings of $1,150. That would also provide me with a higher survivors benefit of almost $3,100 per month by 2021 should anything happen to him. Because of the recent changes is this strategy no longer available to us?
A: Congress recently ended two Social Security claiming strategies that helped couples maximize their retirement income. The strategies being eliminated allowed individuals to claim a spousal benefit while their own retirement benefits continued to grow. The “file and suspend” option is no longer available for people who will be younger than age 66 on April 30, 2016. Those older than age 66 on that date are grandfathered in and still able to use the claiming strategy. If you and your husband won’t be 66 until later in the year, your husband would not be able to file and suspend as planned.
A second strategy that was changed permitted married couples who reached full retirement age (generally 66 for today’s retirees) to file a “restricted application” which allowed individuals to collect only a spousal benefit, while their own benefits continued to increase. Unlike file and suspend, this change applies to people younger than age 62 by the end of 2015, so you still can take advantage of some planning to maximize what you get.
While you should check with a professional financial advisor, you and your husband still have the right to claim spousal benefits only, when you turn 66. Under the new law changes, while you couldn’t apply for spousal benefits, based on a suspended application, your husband can apply for spousal benefits based on your full retirement age benefit, using a restricted application while his own benefit continues to grow. He would receive half of your benefit, or about $405 per month, until he claims his own retirement benefit. Together the two of you would receive $1,215 per month, which is better than the $1,150 you alone were hoping to get as a spousal benefit. Then, when he turns 70, he can claim his full benefit of about $3,100 per month.
Mark Miller, the editor and publisher of RetirementRevised.com, recently released a comprehensive and clearly written guide to Social Security Spousal and Survivor Benefits. To download a free copy, visit www.RetirementRevised.com.