Social Security Changes—Don’t Delay on File and Suspend Strategy

A deadline is looming and the clock is ticking on the valuable Social Security claiming strategy known as “file and suspend”.  It’s critical that if you are or will be Full Retirement Age (age 66) by April 30, 2016, you must take action prior to this date.  If you miss the deadline, you are out of luck.

Under current rules, an individual who is Full Retirement Age (66) or older can file for Social Security retirement benefits and immediately suspend them allowing their benefits to earn delayed retirement credits of 8% per year up to age 70 (and allow eligible spouses and dependents to receive benefits).  These delayed retirement benefits can increase their benefits by 32% for the rest of their life—or their spouse’s life!

And in so doing under current rules, a spouse could file a “restricted” application for a spousal benefit only and let their own benefit grow at that same 8%.  Then later change to their own larger monthly benefit.  This combination strategy can significantly increase the total retirement benefit received over their lifetimes.  But under the new Bipartisan Budget Act passed this year, these and some other strategies will eventually not be available.

What’s Changing

On November 2, 2015, the Bipartisan Budget Act of 2015 became law.  This new law extended the nation’s debt limit through 2017, set spending levels, raised spending caps and a few other changes. And, among those changes were some fairly significant changes to certain Social Security retirement strategies.

Understanding Social Security retirement benefits may have just become a little more complicated.  As a result of this law, going forward there will be three sets of rules for people wishing to maximize their Social Security retirement benefits.

  1. Born on or before May 1, 1950: This group can be “grandfathered” and can use the old set of rules of filing and suspending as long as you execute this strategy before April 30, 2016.
  2. Born May 2, 1950 but before January 2, 1954: Basically, this group who are age 62 by the end of 2015, can “file and restrict” their benefit to a spousal benefit.
  3. Born on or after January 2, 1954: (61 years or younger). All the new rules will apply.

Social Security rules can be very confusing.  So it’s important to see a qualified financial advisor as soon as possible to help you understand how these important changes may affect your retirement income stream.


Article provided by: Joe Campanelli, Senior Care & Retirement Risk Advisor

Joe Campanelli

(319) 887-3752  |


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