Broker Check

Social Security

The changes that were implemented in November of 2015 affect several previously available Social Security income strategies, particularly those that benefited married couples. The change did, however grandfather a group of people based on date of birth, allowing them to take advantage of some eliminated benefits when they reach full retirement age (FRA).

The well-publicized “file & suspend” strategy that was affected by 2015 changes is actually (2) separate strategies. “File & suspend” refers to your ability to open your up record so others can potentially use it to file their own claim (spouse, minor child, dependent parent, etc.), suspend your own benefits until a later date thus allowing it to increase, by typically 8% each year, meanwhile allowing your spouse or other dependent collect their portion of your benefit. This strategy, when exercised correctly and in a timely manner, increased overall household income by at least 40%.

The second part of “file & suspend” strategy refers to your spouse’s (or other dependent) ability to collect their portion of your benefit while your benefit is suspended. That’s where it gets tricky! The 2015 change eliminated the opportunity to collect another’s benefit while it’s suspended. In other words, if you file for your benefit your spouse (or other dependent) can not file for their portion of your benefit unless you continue collecting. But your spouse CAN, under certain circumstances, file and collect their portion of your benefit while deferring their own. Remember, deferred benefits grow by a fixed 8% each year.

Example – Jack & Jill, married; Jill is 64 & Jack is 66, his full retirement age (FRA):

 Jack’s current benefit is $2480 per month, but if he defers taking it until age 70, that benefit will grow by 32% to approximately $3273 per month

  • Jill’s benefit (discounted for her age because at 64 she is two years short of her full retirement age of 66), is $1968 per month
  • When Jill files for her retirement benefit, Jack becomes eligible to file for a spousal only benefit under her record because:
    • Jack has reached his full retirement age
    • Jack was born before January 1, 1954

By following this strategy, Jack & Jill have increased their Social Security benefit by:

  • Approximately $50,000 that Jack can collect before reaching age 70 (between ages 66 and 70)
  • Approximately $10,000 more each year from his own benefit, if he starts it at age 70

Please note that Social Security rules are complex and the above example is just an example. Benefits available to divorced and widowed individuals are calculated differently from those available to married couples. Windfall provisions and other factors may affect how final benefits are determined. Understanding when and how to start Social Security income can be confusing, which is why we offer a free one-hour consultation to anyone who is interested in learning more about their options.

If neither you nor your spouse is eligible for grandfathering based on your dates of birth, opportunities for creative benefit claiming still exist, though they may not be quite as plentiful. Please schedule a consultation to see the full spectrum of claiming strategies that could work best for you.