Social Security Legislation Affects How Much You Will Receive
November 09, 2015

You may be in a position to take advantage of the current law before it is changed. It could mean as much as $100,000 in additional lifetime benefits

On November 2, the US Congress passed the Bipartisan Budget Act of 2015.  This new budget means potentially less money for dual income couples and divorces starting on May 1, 2016.

Note that the “core “benefits of Social Security remain unchanged, but the claiming options have. 

In the past, with a dual income couple, one spouse would file at full retirement age- typically age 66, and then suspend taking benefits.  That would allow the other spouse to start collecting “spousal” benefits right away as early as age 62 on the first spouse without touching their own.   Both spouses would then wait until age seventy to file for their full worker benefits which would have grown at an 8% compounded rate over those years. 

If you are divorced and entitled to a benefit based on your ex-spouse’s earnings, the above rules apply to you, that is, if you were married for ten years or more.

For those of you that are between 65 and 70, you still have a window of time, May 1, 2016, before the law is enacted where you can take advantage of this opportunity.

 

Here are the details

Social Security offers credits of 8% per year for those who delay receiving benefits between the ages of 66 and 70.  The 2015 Act eliminates some of the more strategic way of earning those deferral credits.

The spouse could elect to receive spousal benefits and switch over to worker benefits at age 70, allowing both to earn the deferral credits.  Under the new law, no spousal or dependent benefits will be made unless the worker is receiving benefits.  The ability to start collecting spousal benefits and switch to worker benefits has also been eliminated.  Anyone entitled to both benefits will receive the larger of the two.

The law also changes retroactive benefits.  As example a person files and suspends payments at 66, then becomes ill at age 68, he could file for a retroactive payment going back to the original filing date.  The new law limits the time frame for retroactive payments to six months.

If we may be of help in determining the best approach for you to take, please give us a call.

 

Susan Templeton

November 2015