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The winds of change

Diana Bunch, Financial Advisor

February 3, 2016

Last year you may have seen advertisements and notices of informational meetings touting the many ways you can structure your Social Security benefits and maximize your income. I, myself sponsored a few of these events. Well, it was good while it lasted.

As is too often the case, "All good things must come to an end!"

The Bipartisan Budget Act of 2015 was signed November 2. Common filing strategies currently offered will no longer apply starting in 2016. Make sure you understand how they could impact you and your spouse.

Listed below is a summary of the recent changes:

File and suspend

A filer who is at or past Full Retirement Age (FRA), can file for individual benefits, but suspend receiving them and allow a spouse or dependent to collect off of their record.

April 30, 2016: Anyone 66 or older can still file and suspend to allow an eligible spouse or dependent to collect a benefit off their record under the old rules.

April 30, 2016: "File and suspend" will no longer enable a spouse or dependent to collect benefits off of the filer's record, unless the filer takes a benefit. For a spouse or dependent to collect a benefit, filers must collect their own benefit and forgo delayed retirement credits. If an individual suspends benefits, all spousal and dependent benefits will be suspended.

Restricted application for spousal benefits

Currently: A spouse who is at or past FRA, and who has not received any benefits, can choose a spousal benefit only (referred to as a Restricted Application) or his or her own individual benefit.

Anyone 62+ by the end of 2015: Is grandfathered and retains the ability to restrict their claim to spousal benefits only if they wait to collect until they reach their FRA.

After year-end 2015: Individuals who are younger than 62 will not have the choice of which benefit they collect when they reach FRA. Regardless of their age, they will be "deemed" to have filed for the highest benefit. They will no longer have the option to restrict their benefit to their spousal benefit only.

Lump sum voluntary reinstatement of benefits

Currently: An individual who files and suspends can request that all suspended payments be paid in a single lump sum.

Through April 30, 2016: Individuals who will be at least age 66, and want to utilize this strategy, will need to file and suspend benefits.

Individuals who file and suspend benefits after April 30, 2016: will no longer be able to request a lump sum payment of all suspended benefits.

Since Social Security benefits is an important component to most retirement income planning, it's important to know the facts. Careful planning can make a big difference in how you spend those golden years

Contact Diana if you have questions.


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