Social Security Changes

Last week, in the dead of night and at the last minute, Congress and the President altered the Social Security rules many folks planned on using to claim their maximum benefits. What are the changes?
 
Well, if you’ve never been married, no worries. Nothing changes for you and the strategy to get the most SS benefits over your life is rather simple and we can talk to you about it. Nothing complicated here, really.
 
But, if you’ve been married or are married, you might be in for a surprise if you thought you had a strategy to get the most out of those SS taxes you've paid over the years.
 
Here’s an illustration of the changes:
 
Jack and Louise are both 64. Jack was the high earner and expects $2400 at his full retirement age. Louise a bit lower at $2200.
 
What they had planned was for Jack to file his claim when Louise turned 66.
 
Then, she would get her spousal benefit, half of Jack’s SS insurance amount, or $1200/mo. Jack would immediately suspend his application and wait until 70 to take his benefits.
The advantage for Jack was, his $2400 would grow at 8% simple interest every year for 4 years and at retirement to $3179—and that doesn’t even include the cost of living increases SS has been giving (until this year, sadly but there’s always next year).
 
Well, Jack and Louse can’t do this any more. This ‘File and Suspend ‘Strategy has gone the way of Leaded Gas.
 
So now, Louise will just have to claim her own $2200 benefit at age 66 (unless she needs it earlier and then it will be reduced forever), and Jack can delay taking his benefit at age 70, building his monthly amount to $3179.
 
EXCEPT… if you’re turning 66 by next April you WILL be able to use this strategy. There’s a 180 day window available. This is a big opportunity.
 
But there was always a second possibility: Jack could start taking half of Louise’s benefit when she took her $2200, getting his $1100/mo spousal benefit from Louise. Together they would get $3300.
 
Then, Jack files for his own benefit when he’s 70, his $3179 instead of the $1100 spousal benefit. Together they’d be getting $4279. (Again, not including Cost of Living Adjustments that change from year to year.)
 
This is called a ‘Restricted Filing’: Jack is ‘restricting’ his claim to his Spousal Benefit and takes his own benefit when he’s 70. 
 
This is no longer possible…
 
EXCEPT (again!) for those who will turn 62 by January 2nd of next year. This small window will allow this second strategy, Restricted Filing, if you’ll be 62 by the beginning of next year.
 
Let’s sum up.
 
1)         File and Suspect has a small window for anyone turning 66 by next April.
 
2)         Restricted Filing for Married Couples is still possible for those turning 62 by Jan 2, 2016.
 
The good news is Eaton-Cambridge can help! Get back to us and we can help you understand your best claiming strategy.