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Congress Eliminates Popular Social Security Strategy

Filed under: Retirement

Active seniors having fun and running through the autumn forest

For many couples, Social Security will make up an important part of their overall income in retirement. So it shouldn’t be surprising that many retirees look for ways to maximize their Social Security benefits. Unfortunately, it’s not always as easy as it sounds! Then, when you think you have it figured out, things can change.

For years, Social Security allowed a popular strategy known as “File and Suspend”. Here’s how it worked:

Mary and Tom, a married couple, have both reached full retirement age. Tom, the higher earning spouse, wants to keep working until age 70. He knows that he will receive a higher monthly check if he waits to receive his benefits.

Needing at least some Social Security income now, Tom and Mary file for benefits, but “suspend” Tom’s checks until age 70. He continues to work, save for retirement, and accumulate more credit with the Social Security Administration. Meanwhile, Mary decides to go ahead and claim her spousal benefit, which is equal to about half of Tom’s would-be checks.

When Tom reaches age 70, he retires and begins to receive a much larger Social Security check because he waited to collect benefits. Mary converts to her own full benefit, and now both Tom and Mary are receiving higher individual checks than they would have received by simply filing for benefits at full retirement age. If Tom dies before Mary, she ccould even convert to a survivor benefit, equal to 100 percent of Toms’ scheduled checks. This helps the lower earning spouse to maintain his or her lifestyle in retirement.

There’s just one problem. A new budget deal recently passed by Congress on November 2 will eliminate the file-and-suspend strategy. The new law won’t take effect for six months, so you still have a little time to take advantage of the old rules. But that’s only if you and your spouse have reached full retirement age, or are set to do so within six months (dating from November 2).

So what’s the point? The point here is that Social Security can be far more complicated than you might think, and things can change on a moment’s notice. Working with an experienced professional helps you to avoid surprises and mistakes. Call our office at (925) 906-4609 and we can meet with you to discuss your Social Security income strategy.

Ambrose Financial and Insurance Services, LLC is not associated with or endorsed by the Social Security Administration or any other government agency.

15032 – 2015/11/16