There is quite a bit of confusion out there about what is still available to consumers wanting professional advice about how to improve their Social Security Benefits. What you read on the internet is confusing at best. This article will try and balance some of that confusion with fact vs. fiction.
Yes, the claiming strategy “File and Suspend” is gone. Although this was a powerful tool to use, a much higher percentage of our clients utilize the claiming strategy “Restricted Application for Spousal Benefits” to improve their income stream position. Why is that? Usually because of circumstances, most people we are advising need at least one of the parties to receive benefits to supplement what they have saved or have available for retirement through pensions or other sources.
Now, under the new rules created by the Bi-Partisan Budget Act of 2015, those turning age 62 by December 31, 2015, can still SUSPEND your benefit but that comes with new rules. These rules are as follows:
- If you SUSPEND, all auxiliary benefits will suspend along with your request. Auxiliary benefits are spousal benefits, family benefits, and no contingency fund provisions.
- Your benefit will improve by 8% per year while suspended. You can unsuspend at any time, but allowing it to suspend until age 70 will provide you with a 132% increase over your full retirement age benefit.
- This increased payment will also be passed along to your surviving spouse as a widow or widower’s payment.
- If you took Social Security early, you can SUSPEND any or all payments from Full Retirement Age to age 70 to erase part of the payment reduction for early filing.
Do not confuse this information with Restricted Application as they are two different strategies.
The decision when to file any claiming strategy is very important. Sometimes what appears logical at the time, does not work out that way on paper. That is why when people call us with questions, we are hesitant to answer the questions on the phone without having their available benefit numbers and information about their situation in hand. Sometimes we even get fooled, but we have the Cadillac software to assist us. Professional advice is recommended for this lifetime benefit choice.
Contact us at 601-954-0699 or dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA – we have your back on this one!
