The window of opportunity to leverage certain Social Security benefit claiming strategies is quickly closing. As part of the Bipartisan Budget Act of 2015, two key provisions were discontinued for future beneficiaries. These unexpected changes will reduce retirement income by thousands of dollars for millions of retirees. However, there might still be time for you!
File & Suspend
Prior to the law change, an individual who reached full retirement age could file for benefits and immediately suspend them. This allowed any eligible dependents (i.e. spouse or qualifying child) to claim benefits off the suspended individual's record while s/he continued to earn delayed credits (8% per year) until as late as age 70. At that time, the worker's benefit would begin at a much larger rate.
Under the new rule, a voluntary suspension will also suspend benefits for anyone else receiving income off the suspended record. If an individual wants to delay claiming until age 70, the eligible dependents must also wait until the worker begins receiving his/her own income.
However, if you reach full retirement age by April of this year, you may still utilize file and suspend under the old guidelines. Your claim must be made prior to April 30th, 2016!
This provision allows an individual, at full retirement age, to file for spousal income only while their own record earns delayed credits until age 70. At that time, s/he would switch from the spousal income to their own larger worker benefit. This strategy is often referred to "claim now, claim more later".
If you were 62 or older by January 1st, 2016 you retain the ability to file a restricted application at full retirement age. Everyone turning 62 after that date has lost this claiming strategy going forward. Do not expect the Social Security Administration to remind you of this grandfathered entitlement in the future. Be sure to plan appropriately so you do not lose out on this lucrative opportunity.