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Thursday, February 18, 2016

FAQ: Understanding Recent Changes to Social Security Claiming Strategies

What changes were made by Congress to Social Security "files and suspend" claims?

In 2015, Congress voted to make some sweeping changes to Social Security laws – primarily those impacting retiring Baby Boomers and their portfolios. The following answers some general questions about the changes.

What are the two major areas impacted by the new legislation?

Under the new Social Security laws, two concepts known as “file and suspend” and “restricted application” will be eliminated as of May 1, 2016. These are known as “claiming strategies,” and are alternatives for retirees who do not wish to fully engage their benefits immediately upon reaching the age of eligibility.

What is “file and suspend?”

File and suspend is a claiming strategy in which one claimant files for full benefits at age 66, but opts to suspend the receipt of the first payment until some point thereafter – accruing retirement credits in the meantime. The option was popular with married couples, as it allowed one spouse to receive heightened monthly benefits while the other’s benefits lingered in suspension. Once the suspended benefits entered distribution, the second spouse would be eligible for a higher monthly payment.

What is a restricted application?

A restricted application is one in which a spouse files for full benefits at age 66, but opts only to receive spousal benefits only – thereby allowing the filer’s personal benefits to grow until age 70.

Are these options totally eliminated?

Anyone having already elected the “file and suspend” claiming strategy is safe, as the rules do not go into effect until May 1, 2016. At that time, file and suspend claims will no longer be an allowed; however, anyone who has reached full retirement age (66) by May 1 may still elect this option, provided the application is submitted by April 29, 2016.

With regard to restricted applications, claimants born on or before January 1, 1954 will still be eligible to elect this option, whereas all others will be prohibited as of May 1, 2016.

If you have questions or need assistance with filing for social security benefits, you should consult with a qualified attorney.


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