Recently Congress announced that it is making changes to the Social Security filing strategies that many couples have used for years to add thousands of dollars to their retirement incomes. Before you read any further, please note that if you are already receiving Social Security benefits based on your own record, or by using one of the strategies that will soon go away, your benefits will not change or be interrupted by the legislation.
The legislation in question, the Bipartisan Budget Bill 2015, was passed by the Senate last week and will likely become law once signed by the President. The two strategies under fire – known as file-and-suspend and a restricted application for spousal benefits – have made it possible for couples to delay claiming Social Security benefits based on his or her own earning record, each taking advantage of their eventual benefit growing by 8% per year for each year deferred, while one spouse can claim ½ of the other spouse’s benefit until switching to their own (often age 70). To do this, typically the higher earner files for benefits and suspends them, while the other files a restricted application for spousal benefits.
Here’s what you should know: