Is it true Congress is about to eliminate some very favorable Social Security rules?
Yes. The changes are included in the new budget bill, which at press time was expected to be passed last week. They would effectively kill two popular strategies for claiming Social Security retirement benefits -- "restricted application for spousal benefits" and "file and suspend."
"File and suspend" lets a married couple postpone the bigger of their two primary Social Security benefits while collecting a spousal benefit based on the higher earner's record. You must be at full retirement age to file and suspend. Typically, the husband files for Social Security after turning 66 in order to green-light his younger wife's application for a spousal benefit. He then immediately suspends his application, and his now-postponed benefit grows 8 percent a year for up to four years.
Starting six months after the budget bill is enacted, Social Security will stop accepting new applications for spousal benefits based on a suspended primary benefit.
"Restricted application" lets a person who has reached full retirement age apply only for a Social Security benefit based on a spouse's earnings record, while postponing his/her own primary benefit.
Under the proposed legislation, anyone who is 62 or older in 2015 will still be able to file a restricted application for spousal benefits after reaching full retirement age -- but that option will no longer exist for people who are younger than 62 on Dec. 31, 2015. Regardless of their age when they apply for Social Security, they'll automatically apply for both their spousal and primary benefits, and will receive an amount equal to the larger of the two.
The bottom line Couples planning to use a "file and suspend" strategy may have only six months left in which to become eligible and get it done.
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