It’s traditional to give gifts in this holiday season. Uncle Sam however just took a few away.
A few weeks ago, Congress passed and President Obama signed the Bipartisan Budget Act of 2015. As usual it is complete with riders that have nothing to do with the Federal Budget. This year there were two major changes to the Social Security Program that may affect you.
The first change is the elimination of Restricted Applications for anyone born after 1/1/54, or essentially who won’t be Age 62 by this New Year’s Day. Restricted Applications are commonly known as “Spousal Only”, where the applicant claims Spousal Benefits at age 66 and then switches to their own benefit at age 70, which has increased by 8% per year for 4 years.
The second change is the elimination of File and Suspend effective 5/1/16. Essentially you can still File and Suspend if you were born on or before 5/1/50 if you act by April 30th. Those who have previously filed in this manner are grandfathered. File and Suspend allowed a taxpayer to continue to accrue higher benefits by delaying payments from Age 66 to Age 70 and allowing Spousal and Minor/Disabled Child payments to be made during this period.
Social Security can be very complex and decisions are also effected by many outside factors such as whether the taxpayer is still working. The elimination of these benefits can cost some of you Tens of Thousands of Dollars. This is both an opportunity for some of you to take advantage of these disappearing benefits while you still can, and a reason to revisit the Social Security portion of your retirement planning if these are being taken from you.
If you have any questions about this, we encourage you to contact our office.
The Bottom Line: Now is the time to review your Social Security Strategy and possibly act before May 1st.
–Michael Ross, CFP®