Laura Medigovich: New rules for Social Security

http://www.recordonline.com/article/20151120/NEWS/151129916


Laura Medigovich: New rules for Social Security


By Laura Medigovich
Posted Nov. 20, 2015 at 7:40 PM



The budget deal out of Washington this month closed two unintentional loopholes, as they were being called, in Social Security claiming strategies. One is called the “file and suspend” and the other “restricted application.”

For couples 66 and older, the “file and suspend” strategy allowed a spouse, say a husband, who reached full retirement age to file for and immediately suspend his own retirement benefit so that it can continue to grow until age 70. The husband then receives delayed retirement credits, which increases his monthly benefit by .66 percent a month, or 8 percent per year. And once the husband reached 70, the benefit would be 32 percent higher than if he had started collecting at age 66.

The other strategy, known as “restricted application,” would let the wife in my first example claim spousal benefit at full retirement age (around 66) but later switch to her own higher benefit at age 70.

The bill killed both strategies.
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The new rule will kick in six months from the signing of the legislation (Nov. 2). Individuals who are 66 years old and older before May 1, 2016 can still take advantage of the “file and suspend” strategy, but need to act before May 1.
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