Social Security Optimization to become less optimal

If the current budget legislation is passed into law later this week, big changes will occur in the world of Social Security optimization. The impact of this legislation: No more restricted applications and no more file-and-suspend strategies. (Survivor benefits can still be optimized and voluntary suspensions will still be available).
In English: If you are 62 or older as of the end of 2015, these changes will not apply to you. If you are younger than 62 and have considered optimization strategies, they will likely not be applicable. Why “likely”? Because the legislation has not yet passed and because there may be a 6 month grace period for the file-and-suspend strategy.
What this means for Clarus clients: We will reevaluate your claiming strategy at our next review and we are adjusting our Social Security assumptions to take into account these upcoming changes.

Key Terms:
  • Restricted application: When a worker is eligible for both his or her own benefit and a spousal benefit, a restricted application can be filed for spousal benefits only, meaning the worker’s own benefit will continue to accrue delayed retirement credits.
  • File-and-suspend: A Social Security policy allowing a worker to file an application for retirement benefits but immediately suspend payments. This makes the worker’s spouse eligible to file for and receive spousal benefits. This also allows the worker’s benefit to accrue delayed retirement credits
  • Voluntary suspension: When a worker who has already started Social Security benefits stops their payments and earns delayed retirement credits