Changes to Social Security Strategies

Nov 24

When President Obama signed the budget bill into law on November 2, 2015, he also approved changes to Social Security which affect the strategies available to married couples for maximizing their benefits. While it is not especially good news for couples who might have benefited from these strategies, it is not surprising that certain loopholes in the Social Security system have been closed effective on April 29, 2016. The Social Security Administration has not yet added the new rules to its policy manual, but as they are presently understood, they are as follows:

1. Say goodbye to the “file and suspend” strategy for collecting spousal/dependent benefits. If your spouse suspends his or her benefits, you cannot collect spousal benefits based on his or her work record.

Exceptions: Those who have already claimed benefits using the “file and suspend” strategy or who use this strategy before April 29, 2016 are “grandfathered” in. There will be no change in how these couples receive benefits.

2. The “restricted application” strategy for a spouse who has reached Full Retirement Age has also been nixed. Previously a spouse reaching Full Retirement Age could apply for spousal benefits while allowing his or her personal benefit to accrue delayed retirement credits for up to four years. Under the new law, filing an application for spousal benefits will also trigger your own retirement benefit. You will receive an amount approximately equal to whichever is higher: your personal retirement benefit or your spousal benefit.

Exceptions: Those who will reach age 62 before the end of 2015 sill have the option of filing a “restricted application” to collect spousal benefits and later switching to their own higher-value benefit.

3. If you choose to file and suspend your own retirement benefits, you may no longer collect those benefits retroactively.

Exceptions: Those who have already suspended benefits or who do so before April 29, 2016 can still un-suspend their benefits and collect retroactive payments as previously allowed.

At present it is unknown how these changes will affect divorced spouse benefits.

Because these changes happened suddenly and without any public debate, agencies and financial strategists are still scrambling to figure out the ins and outs of the new law and provide the best information to those they serve. Before making any decisions regarding your Social Security claim, make sure you are well informed of the latest information. There are online tools such as Social Security Solutions and Maximize My Social Security which can help you decide what’s best for you. It may also be advisable to seek help from a financial planner.

If you need help planning your strategies for the future, please get in touch. We will be happy to work with you to ensure you meet your legal, financial, and care goals.

Amelia Crotwell, JD

Amelia Crotwell, founder and managing partner at Elder Law of East Tennessee, has guided families through long-term care and special needs challenges for nearly two decades. Specializing in Life Care Planning and special needs trusts, Amelia also collaborates across all areas of elder law, including wills, trusts, Medicare, Medicaid, probate, and veterans benefits planning. Certified as an Elder Law Attorney since 2011, she is president-elect of the Life Care Planning Law Firms Association and co-chair of their strategic planning committee. Amelia is deeply involved in the Special Needs Alliance and a prominent member of the National Academy of Elder Law Attorneys. She played a key role in founding the Tennessee chapter of NAELA, serving as its first president. A member of the Tennessee Bar Association and past chair of its Elder Law Section Executive Council, Amelia also dedicates time to pro bono work and community education. She earned her J.D., summa cum laude, from the University of Tennessee College of Law and teaches Elder Law there as an adjunct professor since 2018.