cuts to a couple of key Social Security claiming
strategies — squeezed into federal budget legislation
in October — continue to confound seniors, whether or
not they’re actually affected by the changes.
lot of people are contacting me in a panic about what to
do, but many of them are grandfathered in and have
nothing to worry about," said Michael Kitces, a
financial planner and blogger who writes frequently
about Social Security claiming at www.kitces.com.
"Younger people will certainly be affected, but
they aren’t the highest volume of questions we’ve
the new rules, after a phase-out period that will
grandfather in some seniors, couples will no longer be
able to collect spousal benefits if they are generated
from a beneficiary who has filed for and suspended his
or her own benefits. And people who file and suspend
their benefits will no longer have the option of
reversing course and requesting a lump-sum
"refund" of benefits that in essence resets
their claiming date. Also ending is the ability to file
a restricted application at full retirement age for just
spousal or just work-based benefits, a strategy people
use to collect some money immediately, while letting the
other benefit grow.
how Kitces explains the changes in detail:
you were born April 30, 1950, or earlier: You can still
file for benefits at full retirement age and then
suspend them in order to earn delayed retirement credits
while allowing a spouse to collect benefits on your
record while you delay. Individuals can file and
suspend, and then if circumstances change they can go
back and collect those suspended benefits, though future
benefits will be based on the earlier filing date. In
both situations, the suspension must be filed by April
29 of 2016.
between May 1, 1950, and Jan. 1, 1954: You’ll still be
able to file a restricted application for benefits,
meaning at full retirement age you can choose whether to
take a spousal benefit or one based on your work record.
But you won’t be able to let a spouse claim benefits
on your suspended application.
Jan. 2, 1954, or later: You won’t be eligible for the
file-and-suspend strategy and you won’t be able to
take just a spousal benefit or just one based on your
work record while letting the other grow.
caveat worth mentioning here is that the Social Security
Administration has not yet laid out specific guidance on
how these measures — hammered out in the federal
budget legislation in October — will be implemented.
So if there is a quirk in the calendar, the dates
mentioned above could be altered slightly — no small
thing for people whose birthdays fall around the dates
Social Security spokesman also said divorced spousal
benefits are not affected by the change in the
suspension-of-benefits policy. Some observers have been
calling for clarification on the changes because it
potentially could result in situations where a
vindictive ex-spouse would suspend benefits just to keep
a former spouse from collecting. The fact that divorced
spouse benefits aren’t affected then raises some
interesting questions about how far a couple would want
to go to retain the ability to collect. In theory, a
couple could divorce just to have the opportunity to
have one person collect spousal benefits while the other
continues to earn delayed retirement credits.
thinks it’s highly unlikely that couples would go to
this extreme for a small bump in Social Security
benefits. And doing so would negate other positive
incentives in the tax code for staying together, he