What the New Social Security Rules Mean to You and Your Retirement Income

The Bipartisan Budget Act of 2015 will affect how individuals maximize their total retirement income. In fact, two of the most powerful claiming strategies that F3E has used to increase lifetime retirement benefits by as much as $50,000 will be eliminated.


One benefit-maximizing strategy that is ending is the “file-and-suspend” strategy.

The way it worked in the past was that the spouse with the higher benefit (Spouse 1) filed for benefits at age 66, and then immediately suspended them, allowing the benefit to grow at 8% each year. Since they have filed, their spouse is then able to file for their spousal benefit while “restricting” the application solely to a spousal benefit (equal to 50% of their spouse’s benefit). When they turn 70, they can than switch over to their own benefit that had been growing at 8% each year.


Another lost opportunity is of the retroactive benefit for Americans who are not age 66 by April 30, 2016. 

Do not think that the recent changes only impact married couples.  Single adults, divorcees, and parents with a dependent or disabled child will also feel the pain. Before the recent ruling, people who suspended benefits could contact the Social Security office and receive a lump-sum check equal to all of the suspended payments. Many Americans saw this as a financial cushion in case they faced a serious medical emergency and needed a cash infusion to help pay expenses. The new law eliminates the option to receive a retroactive lump-sum payment.


There is some good news, but only if you act quickly.

We have a six-month grace period after the bill was enacted to “grandfather in” existing strategies before they are no longer available. The magic numbers that keep coming up for expiring strategies are ages 62 and 66. If you turn 62 anytime during 2015, there are certain strategies protected for you. If you are 66 and file before April 30, 2016, there are certain beneficial file-and-suspend strategies you can still implement. It’s important to not procrastinate. Currently, Social Security Offices across the country are quoting around a 2 month wait for an in office or phone appointments.


Get smart. Take a course. Learn the law.

With tens of thousands of lifetime dollars at stake, F3E is offering a new course about the new rules and the strategies currently available to those who need to act before April 30, 2016. If you are single, married, divorced, or have dependent children, then the changes in the bill will affect you. You can request the dates of the new course by contacting your EAP or HR department.


Elizabeth De Los Santos, MBA
The Foundation for Financial Education


NOTE:  The calculation of worker, spousal, and widow(er) benefits has not changed.  The calculation of benefits, whether you draw early or late, also has not changed.  Couples who have already implemented the file-and-suspend strategy are unaffected by the new law.