Hear Yee, hear Yee, change is coming and it will effect social security claiming options. The passage of the Bipartisan Budget Bill of 2015 will end two major Social Security claiming strategies for married couples and will become practice by April 29, 2016. However, if you are married and turning at least 62 this year, there are some options still available, but these are limited. (See chart below)
Here is what will happen:
File and Suspend ─ If you’re among those who have not filed for Security Benefits at this time, you will no longer be able to use the program’s “file and suspend” rule. This rule allowed for an individual to file for benefits, upon reaching eligible claiming age and then immediately suspend receipt of these benefits. Since the claim has been filed, the spouse was permitted to request spousal benefits when they reach eligible claiming age. This allowed the couple to receive benefits while allowing the suspended benefit account the ability to grow and obtain delayed retirement credits by 8% a year. Under the new rule, the suspension of benefits will apply to all those associated with the person’s earnings and you will no longer be able to choose the “file and suspend” option.
Restricted Application ─ this type of filing allowed an individual to collect only a spousal benefit , which is based on the spouse’s record, while letting their own retirement benefits rise by 8% a year, for up to four years, up to age 70. If an individual did not file for a restricted application, he or she would be filing for all benefits currently available. This rule will no longer be an option, and filing for spousal benefits will trigger a person’s own retirement benefits; making their payments by the agency an amount that is approximately equal to the greater of the two benefits.
If you or your spouse will turn 66 before April 29, 2016 you can continue to file and suspend and may be eligible to receive benefits after the law becomes effective. If you intend to do this, you should promptly begin the process. Also, those who are 62 or older at the end of 2015 are grandfathered and not subject to the expanded rules. If you filed or filed and suspended for your own retirement benefits (or file before April 29, 2015), your spouse can still file a restricted application for spousal benefits only as long as he or she will be 62 at the end of 2015.
The chart below can help you see the effective dates and claiming deadlines on both file and suspend and restricted applications: