Both approaches generate higher benefit payouts for entitlement recipients and have been baked into retirement planning for many aging clients. “Life expectancies are growing, but many people have not saved enough to see them through a retirement that could last two or three decades or longer”, he says. “They’ll have to look at adjusting their standard of living or working longer”.
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Industry media and practitioner consensus seems to be that the budget deal could ultimately reduce the amount of Social Security collected by a given individual or couple, but provisions of the deal are also likely to at least maintain, if not improve, the viability of the Social Security System. “They’ll have to delay retirement or live on less”.
Between now and six months after the bill is enacted, file-and-suspend is still in effect, she said.
There are other changes as well in the legislation. This clause will force the higher-earning spouse to claim his own benefits immediately, while his wife’s spousal benefits disappear.
The “file and suspend” strategy has only been allowed since 2000.
People still have the option of a lump sum payment of a few or all of the suspended payments dated back to the date of the suspension, Landis says.
The elimination of the claiming strategies will save about 0.02 percent of the taxable wages and self-employment income subject to Social Security taxes over the next 75 years, according to the Social Security Administration’s estimates.
Technically, you will still be able to suspend benefits. They will no longer be able to claim spousal benefits only.
The Social Security Administration said it did not have data to show how many couples file benefits in this way. Then, you take one-half of your Social Security benefits, and add them to the total.
Younger workers will not have that option. They were both 66 years old and ready to retire. But no one can collect benefits on their earnings record during the suspension.
The main intention of this Act was to remove the penalty on individuals who were receiving Social Security benefits and income from a job. Your benefits will be reduced for your early claiming, but suspending them can increase future benefits. This will be helpful if the spouse is older and will be collecting benefits anyway. When you turn 70, your Social Security would start but by delaying taking it, it has grown by 8 percent a year to 132 percent. The legislation does not change the rules for surviving spouses. The difference between filing starting at 62 versus 70 can be as high as 76%, according to the news service. Many who were already claiming these benefits would expected to be grandfathered and only new claimants would be impacted.
The same rules as described above apply to disabled childrenwho were disabled before age 22.
The wealthy aren’t the only ones who can use “file and suspend”. The laws that enabled these strategies were passed in 2000, meaning that we’ve only had 15 years to understand and take advantage of the loopholes. “We want to make sure we don’t miss anyone who may be able to take advantage of it”.
As congressional leaders and the White House cobbled together the budget agreement, negotiators required spending reductions to offset increases in federal spending caps. One of the areas targeted was Social Security.
“The notion that you ought to have a financial adviser to benefit from all the provisions in the Social Security program is offensive to us”, said Web Phillips, the senior legislative representative of the National Committee to Preserve Social Security and Medicare. Men in the same group only depend on Social Security for a little over a third of their income.
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Usually changes to Social Security occur over years.
