Chris Stein, CFP®
Questions On the Changes to Social Security
As word gets out about the changes to Social Security implemented in early November, we are starting to get a substantial number of questions asking for clarification. Since one of the best ways to educate people is through real life examples, I want to answer two of the questions that have come in recently.
The first question is regarding the act of filing a “restricted application”. The question is this:
“I would like to ask for one clarification on what I have heard you all talking about with the impacts to the file and suspend strategy. I understand that the ability for me to eventually file and suspend, allowing my wife to apply for spousal benefits and both of our SS benefits grow to age 70 is gone, but what I would like a clarification on is would the following still be allowed: At my full retirement age, I file and begin receiving my SS. Then at my wife’s full retirement age she applies for spousal benefits and puts off taking her full SS benefit until age 70, to allow hers to grow. Is that still possible?”
This person is asking if his spouse will be able to file for just her SPOUSAL benefit alone at her FRA (full retirement age), leaving her own earned benefit to grow to age 70. This technique involved filing a claim with Social Security, but “restricting” that claim to only the spousal benefit she is owed. This ability has been abolished with the recent changes UNLESS you are old enough to be grandfathered into the old rules. TO retain the ability to file a restricted application you must turn 62 by the end of 2015. IF you are just one day younger than that it is no longer allowed.
Withdrawing Your Application
The second question is “My husband started collecting his social security benefits this year after he turned 62 because he couldn’t find a job (I am also 62). In May he was offered a job and because he would make over the allowable amount in 2015 we stopped his benefits, I think around July after he had received 3 checks. We both, after much thought and consideration and calculations, feel we both need to continue working to increase what we will collect and replace some lower years with higher ones in order to increase our benefit. We read that he could file for a withdrawal so we did, but have not yet received paperwork to pay back the money. We thought that if he withdrew he would be able to file and suspend at FRA and I would get a spousal benefit and still grow our own benefits until 70. Is that still possible?”
I will tackle this one in parts since there are few things going on here.
You have the ability to withdraw your application for benefits since you are requesting this within 1 year of application. You will have to pay back the 3 payments you received, but then they will treat you as if you never filed. This will NOT protect you from the new rules about suspending benefits.
The only way to suspend benefits and still allow a spouse to collect their spousal benefit is if you have suspended by May 1st of 2016. Since you and your husband are only 62 now you will both fall under the new rule. This means at full retirement age if he suspends his benefit you will have your spousal benefit shut off as well.
You will be able to file a restricted application for spousal benefits only at FRA as long as your husband is receiving his benefit. You are grandfathered in to the ability to do this since you have reached age 62 by the end of 2015. So half of the normal strategy you wanted to do is available, but not all. People younger than 62 at the end of 2015 lose this ability as well and will be forced to file for whichever benefit is higher (spousal or their own) at any age they choose to file. They can no longer pick and choose their benefits the way they have been able to for the last 15 years.
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