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  • Writer's pictureChris Stein, CFP®

Disappearing Social Security Strategies

I guess it was appropriate that this last weekend was Halloween since something very spooky happened with Social Security.  Buried inside the Budget Bill that was passed by both the House and Senate last week, and then signed into law by the President on Monday November 2nd, were provisions that change the rules regarding claiming your Social Security benefits and caused some Social security strategies to disappear.  While some of the fine details are still unknown as of this writing, I can share with you the few things we do know at this time.  And it is not an overstatement to describe these changes as dramatic.

No Restricted Applications

For those turning 62 after 2015, the ability to file a “restricted application” is removed. Before this year your ability to file a restricted application after reaching your full retirement age gave you the ability to file for a spousal benefit on your spouse’s work record while allowing your own earned benefit to remain unclaimed until it had grown to its maximum amount at your age 70.  This is now not allowed unless you turn 62 prior to December 31, 2015.

Spousal and Child Benefits

Spousal and child benefits are now unavailable if they are based on the earnings record of someone who has suspended their benefits. In the past a worker was able to file for benefits in order to unlock to door for their spouse and/or children to file for their benefits, but then suspend the worker’s benefit allowing it to continue to grow via delayed retirement credits.  With the enactment of this law these benefits will now stop if the worker suspends their benefits unless the spousal/child benefits begin before about May 2nd, 2016.

No Lump Sum Payments

Those people who suspend their benefits, which is still allowed assuming you reach your FRA, no longer have the option of claiming their suspended benefits as a lump sum in exchange for giving up delayed retirement credits.

These 3 changes have drastically altered the available strategies on claiming Social Security.  Stay tuned to this blog as we update with new strategies and point out specifically which of the old strategies are now dead.

The one bit of good news in the bill is that the anticipated drastic increase in Medicare Part B premiums for some people coming in  2016 have been greatly reduced by Congress using a tricky borrowing scheme.

Please use the play button below to hear more about the disappearing strategies.

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