At age 66, Solman’s wife applies for Social Security, but suspends her payments.
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Editor’s note: On November 2, the Bipartisan Budget Act of 2015 (formally the House Budget Bill addressed in this column) was signed into law. “The game plan is at age 70, he will turn on his own Social Security benefit at the much higher rate”. In a few cases, that benefit can add up to tens of thousands of dollars and potentially $100,000 or more. Both had planned to wait until age 70 to apply for Social Security in order to collect maximum benefits. “We are no longer providing reports for divorced individuals or married couples”, founding partner Jeff Miller said via email.
That’s because, just as with regular Social Security retirement benefits, survivors’ benefits are reduced if you begin collecting before your full retirement age (FRA). “He files and suspends his benefit now, before the window closes, but nothing further happens for two years”.
A couple of Social Security claiming strategies known as file and suspend and restricted application are being curtailed or killed as part of the two-year budget legislation. More than 60% of those under age 66 served during the Vietnam War.
Under the new rules, this strategy will no longer work. As a result, more women are paying into Social Security and qualifying for their own retirement benefits.
“I would say that the file-and-suspend strategy certainly could be construed as a loophole for the wealthy, but also folks that were divorced or widowed had the ability to get additional benefits”, McHale said.
Brian Vosberg, author of The Complete Retiree’s Guide to Social Security: Powerful Strategies to Maximize Retirement Benefits and Get the Most From Your Money, says many people associate retirement to age 65. Based on a 2010 study, there were 771,000 disabled veterans receiving Social Security benefits that year.
If you have more than 20 years of substantial covered earnings (that is, you paid Social Security tax), the impact of the WEP begins to diminish.
For those who return home with injuries, Social Security is a resource they can turn to. It shores up the Social Security Disability Trust Fund while increasing the pressure on the Social Security Retirement Trust Fund by reducing the tax revenue to the latter. Our estimate of the potential annual cost of “spouse then worker” for 2006 was $9.5 billion per year.
Social Security has not yet posted any notice about the changes on its public site. Probably not. As Taylor Swift eloquently puts it, “Band-Aids don’t fix bullet holes”.
This article is part of the Ask Carrie: Social Security series. Q: What is the exact date for the rule change? When they file for benefits, they will be required to collect the highest benefit to which they are entitled, whether on their own earnings record or as a spouse. A lot of people went ballistic.
Kotlikoff warns in a PBS Newshour commentary that the law changes will have unintended consequences. Let these heroes know they can count on us when they need to take advantage of their earned benefits. Even someone with the purest of intentions may suffer from the updated rules.
If you are over age 62, you may still use all of the strategies for spousal benefits allowed under the old law, as long as your spouse has taken action by May 1.
The real reminder these rule changes offer is that Social Security is, and has always been, frustratingly complex for the average person. Fortunately the law grandfathered in those who are now taking auxiliary benefits in a file and suspend arrangement. It changed what other benefits are payable off a suspended benefit. You will need to reevaluate your Social Security planning, and overall retirement planning for that matter, and make any necessary adjustments. Meanwhile, those who continue to be eligible should avoid rushing out to file and suspend just because they are about to lose the chance; as with any Social Security approach, careful planning is key.
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Fortunately, the 2016 presidential campaign playing out over roughly the next year gives voters – whatever their political beliefs, age or personal circumstances – an opportunity to press presidential candidates, and the campaign apparatus that surrounds and informs them, for specifics on what they would do to update Social Security to keep it financially strong and adequate for future generations. If they worked in Arkansas (where teachers participate in Social Security) for at least 10 years and then taught in Texas (where teachers do not participate in Social Security), they would qualify for both Social Security and the Teacher Retirement System of Texas.
