Social Security- What Changed?
So while you and I were sleeping, the Congress more than likely changed your retirement plan significantly!
The federal government passed into law November 2nd, the Bipartisan Budget Act of 2015. This new law ends some Social Security filing strategies that have been frequently used by retirees.
How does this new law affect you?
There is a lot of misinformation out there, so we want to be sure you have the facts. First, the law will not change your paycheck. According to Reuters, Congress never intended to take away a person’s current Social Security check. Only new file and suspend rules will be prohibited 180 days after the bill is passed.
The other piece of this new law that can be confusing is the timing of everything. If you are 62 or older in 2015, you will still have the ability to do a restricted application. The file and suspend rules apply to anyone who has not already suspended benefits by 180 days from November 2nd.
There are a few other Social Security strategies that the new law will eliminate. One cannot file for their own benefit at 62 and then start their spousal benefit at 66. Once someone starts their own benefit, it also assumes that they start their spousal benefit and vice versa.
The file and suspend rule will also disallow retroactive benefits. This means that a client cannot start, stop, and start again. If a client starts their benefits at 62, they won’t be allowed to suspend benefits at 66 in order to increase their paycheck.
Finally, the new file and suspend rule can make restricted applications tricky. If a client is grandfathered in on the spousal benefits, their spouse may want to suspend benefits in the next 180 days. A restricted application can only be done if the client is at full retirement age and their spouse has already filed for benefits. If a couple plans on using this strategy, they may want to evaluate their options within the next 6 months.
Please click the link to see a summary of all the changes. this is produced by the advanced retirement panning team at Nationwide Insurance. NFM-14823AO
If you have further questions about this affects you and your plan, please give me a call at the office. I am happy to chat with you!