When to file for Social Security benefits is surely an important concern for many of your clients. However, the conversation and decision haven’t gotten any easier with recent congressional action that will change two claiming strategies for married couples in 2016. Here are the details on the changes.
Two strategies, which married couples could combine, are affected: Filing and suspending benefits and filing a restricted application for spousal benefits.
After a six-month grace period ending around May 1, 2016, if you suspend your benefit, your spouse and/or dependent children won’t be able to collect a benefit based on his or her earning record during the time he or she isn’t receiving one. You will still be able to file for your Social Security benefit starting at age 62 and then suspend getting it until you reach age 70. The delay allows you to receive the 8%-per-year delayed retirement credits.
In addition, if you turn age 62 on or after January 2, 2016, and have an earned income record of your own, you won’t be able to file a restricted application. Currently, you can choose a spousal benefit instead of the one earned with your own work history. That practice lets you receive Social Security income through the spousal benefit without touching your own benefit, allowing it to keep growing. Once the new law takes effect, you will receive whichever benefit is greater at the time you file, whether it’s the spousal benefit or the one based on your own earning record.
If you are already using the strategies, the new law has no effect. For everyone else, your age determines the potential effects:
If you or your spouse is 66 or will turn that age within 180 days of the new law’s enactment on November 2, or you are a widow or widower (including if you were divorced before the former spouse died), you should still be able to use these strategies. You will want to file for and suspend your benefits before May of next year, though, so you are grandfathered under the old provision.
If you are already 62 or is turning 62 this year, you will still be able to file a restricted application to receive only spousal benefits at your full retirement age, provided you or your spouse is either receiving or has filed for and suspended benefits within 180 days of the law’s enactment.
If you are divorced and age 62 by the end of 2015, you will be able to use the restricted application at your full retirement age, again provided the former spouse is also receiving or has filed for and suspended benefits within the 180-day grace period.
If you turn age 62 on or after January 2, 2016, you won’t be able to use the strategies.