Social Security Program Update
The federal budget deal signed into law on Nov. 2 includes two changes that impact Social Security collection strategies. For clients with whom you have already discussed a collection strategy, you will want to make sure they understand how these two changes impact that strategy. For all your other baby boomer clients, you may want to share a brief summary of the changes and offer to meet with them to discuss formulating a collection strategy. The two impacted strategies are:
1. File and Suspend Strategy:
o As of May 2, 2016 filing and suspending will no longer allow a spouse or minor dependent child to claim benefits off the suspender’s earnings record. The filer will have to be collecting in order for his or her spouse or minor dependent children to be eligible for spousal or dependent benefits.
o Anyone collecting a benefit by May 2, 2016 based on the earnings record of someone who has suspended their benefit will be permitted to continue receiving those benefits.
o The lump-sum payout option (retroactive payments) for anyone who has suspended will be eliminated.
2. Restricted Application Strategy:
o Restricted applications (the option gained at full retirement age to collect a full spousal benefit to which you are entitled, leaving your individual benefit to continue earning delayed retirement credits) will no longer be permitted for anyone born after 1953.
o If born after 1953, your client will always have to take the individual benefit first and then the spousal benefit, even after full retirement age.