Social Security Is Changing – What You Need to Know


1Are you looking to maximize your social security benefits? If so, you need to act quickly as the government has closed what quite a few believe is a loophole in the system. For many years now, people have been taking advantage of file and suspend to get the most from the money they obtain, yet the Social Security Administration will no longer allow people to do this come May 1, 2016. What does this mean for you?

In the past, individuals were given the option of filing for benefits at full retirement age. They could choose to suspend these benefits and take their spousal benefit, allowing them to defer collecting their benefits until the age of 70. Doing so would enable them to obtain the maximum benefit through Social Security, as the administration rewarded people for this deferment. In fact, individuals choosing this option found their check would go up approximately eight percent for each year they waited.

Many individuals discovered they could not afford to put off obtaining their benefits, but then learned of this strategy, one that would benefit them greatly. They could file and suspend their benefit. Their spouse could then, at full retirement age, file with social security and use a restricted application. Rather than obtaining their own benefit, they could get a spousal benefit equivalent to 50 percent of the amount their spouse would have obtained a full retirement age. This allows the spouse who filed and suspended to bring in some much needed cash, yet maximize how much they would actually bring in each month once the suspension ended.

Once this strategy became well known, thanks to a book entitled Get What’s Yours, the government quickly realized this loophole existed and opted to close it. Their reasoning behind doing so is they feel it benefits the wealthy, those who can work past the age of 60 and those who are married. Single individuals can’t take advantage of this strategy, nor can those who are unable to work for an extended period of time due to the nature of their job. Although it does benefit the government, as they are paying out less each year these individuals suspend their benefit, they are no longer allowing file and suspend.

This is changing. Individuals younger than 62 when 2015 closed can no longer opt to obtain a spousal benefit while allowing their own to grow. In addition, those who reach full retirement age after April 29, 2016 can’t access benefits payable to another individual if they choose to suspend their own benefits. Keep this in mind if you were born before May 1, 1950, as you are quickly running out of time to take action.

For those born on or after this date, now is the time to boost your investments. You can’t count on Social Security to be there for you when this time does arrive. Although it may still be offered, changes made now will have a lasting impact. You cannot be too careful when it comes to planning for retirement, so take action today. The sooner you do so, the more you will be prepared for whatever the future holds.

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December 16, 2017 |

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