5 things you should know about new Social Security rules

Retirement planning just got a little more complicated for some people.

As we talk about legacy plans to transition your farm business to the next generation, first consider a retirement plan for the senior generation. For most Americans social security retirement benefits are an important piece of that plan. Over the next two posts, we will cover five questions on recent changes.

When Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015, retirement planning got a little more complicated for some people. Here are some questions and answers that could help if you are wondering how the new rules might affect you.

1. The changes to the law impact two strategies, known as "file and suspend" and "restricted application for a spousal benefit." The budget bill has eliminated those strategies for most future retirees, but you may still have time to take advantage of them, depending on your age.

Under the old rules, an individual who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and claim an increased worker benefit at a later date, up to age 70. For some couples and families, this strategy increased their total lifetime combined benefit.

2. The new rules, which take effect on April 30, 2016, still allow the worker to file and suspend and accrue delayed retirement credits, but no one can collect benefits on the worker's earnings record during the suspension period.

Under the old rules, a married individual who had reached full retirement age could file a "restricted application" for spousal benefits after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits. 

3. Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and spousal benefits, and will receive whichever benefit is higher. He or she will no longer be able to file only for spousal benefits.

4. A limited window still exists to take advantage of these two claiming strategies.  If you will be at least age 66 by April 30, 2016, you may be able to use the file-and-suspend strategy to allow your eligible spouse or dependent child to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits before the effective date of the new rules.

5. If you sign up for a “My Social Security” account at the Social Security website, you can view your Social Security Statement online. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivors, and disability benefits, along with other information about Social Security that will be very useful when planning for retirement. If you're not registered for an online account and are not yet receiving benefits, you'll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter.

Watch for part two in this series – more ways to capitalize on Social Security.

If this blog has got you thinking about your own situation, get in touch with my office ([email protected]).


The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

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