Changes to Social Security Opportunities in Budget Act

by Joshua A. Diveley

On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015 (the “Act”). Included in the Act were multiple changes that will remove strategies previously utilized to increase social security benefits available to individuals. The changes will affect individuals who will turn 62 in 2016 or later.

First, the Act removes the ability to utilize the “Claim Now, Claim More Later” strategy. Under this strategy, a spouse with lower earning history applies for worker’s benefits, and the spouse with a greater earning history, and who has retained full retirement age, files a restricted application for spousal benefits. This strategy permits the spouse with greater earnings to delay receipt of his or her own worker benefits, which causes delayed retirement credits to accumulate and creates the opportunity for significantly greater benefits at age 70. Upon reaching age 70, the spouse who has delayed benefits can then apply for his or her benefits, which will have increased due to the delayed retirement credits.

Second, the Act removes the ability to utilize the “File and Suspend” strategy. Under File and Suspend, the spouse with greater earnings applies for benefits at full retirement age and then immediately suspends receipt of benefits until age 70. This permits the spouse with lower earnings to receive spousal benefits while the spouse with higher earnings accumulates delayed retirement credits, which creates significantly greater benefits at age 70.

The changes under the Act affect individuals who will turn 62 in 2016 or later. Anybody that is 62 or older prior to December 31, 2015, may still be able to utilize the Claim Now, Claim More Later or File and Suspend strategies.

© 2015 Houghton Vandenack Williams
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