Social Security New Rules

There has been a popular Social Security strategy that allows a client, upon reaching full retirement age, to file for Social Security retirement benefits, then immediately suspend them. Because benefits have been filed, the client’s spouse is permitted to request spousal benefits upon reaching eligible claiming age. And because the benefits of the primary worker are subsequently suspended – and therefore are not actually received – the original filer can still earn delayed retirement credit increases of 8% per year for waiting.

Under new social security rules recently enacted, however, if someone suspends benefits, then all benefits associated with that person’s earnings record as suspended, including both individual retirement benefits and spousal benefits. This effectively ends the file-and-suspend claiming strategy in the future.

The new rules become effective April 30, 2016. For anyone that became 65 ½ years old by October 30, 2015, there is still an opportunity to file-and-suspend under the old rules prior to the new rules becoming effective. This can be a significant financial planning strategy during retirement.

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