Be aware of the latest changes.
Whether you are married, divorced, widowed, remarried or single, it is now more important than ever to evaluate how to maximize Social Security benefits by claiming at the appropriate time. In 2015, behind closed doors and with no public warning or public input, complex claiming rules suddenly changed, making Social Security more complicated than ever.
Two key Social Security loopholes were closed: file and suspend and restricted application for spousal benefits. The ban on file and suspend went into effect April 30, 2016, and the ban on filing a restricted application applies to anyone who was not age 62 or older by Jan. 1, 2016.
File and Suspend
This popular strategy allowed taxpayers to file for their Social Security benefits to entitle their spouse to his or her spousal benefit (for example, a wife collecting as a spouse on her husband’s record), after which they immediately suspend their benefits to build delayed credits. While voluntary suspension is still allowed, no spousal or dependent benefits may be paid based on a suspended benefit. As a result, there hasn’t been any reason to file and suspend since April 2016.
If you were older than 62 as of Jan. 1, 2016, you may still file a restricted application for spousal benefits when you turn full retirement age. The ability to collect a spousal benefit while your own benefit builds delayed credits is considered one of those loopholes. This loophole benefit will be closed in 2019. If you turn 66 before 2019, you may still take advantage of it.
Although some loopholes have been closed, the rules surrounding a Social Security decision are very complicated. There are still up to 10,000 ways to claim benefits. Many people claim too early and leave money on the table, or they haven’t saved enough for retirement. Coordinating your Social Security decision is the foundation for a retirement income plan adding longevity and impacting a long-term withdrawal strategy.
Sterling Retirement Resources will be presenting four Social Security Strategy workshops (with an emphasis on the changes) exclusively for AAA members on April 10 and 12 at AAA Minneapolis’ St. Louis Park headquarters. For information, contact AAA Minneapolis at (952) 927-2611 or Sterling at (763) 762-3400. Contact Sterling Retirement Resources for a complimentary consultation regarding your Social Security benefits and overall retirement income plan.