Last week, Congress passed their “Bipartisan Budget Act of 2015.” Among the typical budgetary items, there are a few alterations that will impact the Social Security benefit filing system. Anyone who turns 62 in 2016 or later will no longer be able to take advantage of the “file-and-suspend” strategy for the purpose of receiving spousal benefits. This strategy would allow a person to file and then immediately defer their benefits to a later age, while their spouse was able to claim spousal benefits. In turn, the married couple could take advantage of the deferral credits that increase benefits by 8 percent per year after full retirement age until age 70, while still receiving the spousal benefit Social Security check each month. Under the new rule, a person filing for Social Security must file for both their own benefits and their spousal benefits, but will only receive the higher of the two.
This will impact many people who were planning on including this strategy in their retirement spending plan as a main stream of income. However, Congress believed they needed to eliminate this “loophole” to prevent people from receiving larger benefits than the government originally intended.
Check out the articles below for some more detail on the changes being implemented: