In previous posts we outlined the beginning of some big changes to social security claiming strategies this year.http://singlepointpartners.blogspot.com/2015/10/congress-makes-changes-to-social.htmlhttp://singlepointpartners.blogspot.com/2015/11/important-dates-for-new-social-security.htmlNow that the important date of April 29th has passed what should you be aware of. One item we wanted to draw your attention to is the File & Suspend strategy for individuals. File & Suspend is still an option for individual filers, however, unlike in the past we would recommend NOT choosing this option going forward.In the past, if a Single Filer chose File & Suspend they became eligible for a future lump sum reinstatements. Essentially, this meant if you went through the Process of Filing & Suspending your benefit (as opposed to simply allowing it to defer by not filing) you were eligible to change your mind going all the way back to Full Retirement Age. If you had a change in health when you were 69, and felt your life expectancy...
Single Point of View
Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.
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With the new rules for Social Security claiming strategies it is important to know the relevant dates to take advantage of the old rules. For many, this will be out of your hands. However, for those right around the Full Retirement Age right now (66), knowing these dates and acting in time could allow you to take advantage of a claiming strategy that could add thousands of dollars to your retirement income. From our friend, Michael Kitces, here is the chart outlining the important dates and who should consider action prior to them:
As part of the Federal Budget deal passed by Congress (still to be voted on by Senate) there are a couple of major changes to both Social Security and Medicare.Social Security File & Suspend Claiming Strategy Eliminated:We have worked with many clients to develop a plan to maximize social security benefits. Often times, this planning included a strategy commonly called File & Suspend. This strategy allowed one spouse to collect benefits off of the other spouse's record from age 66-70, allowing their own benefit to continue to grow. At age 70 they would switch to their own benefit. This legal strategy has been deemed a "loophole" by Congress and this pending bill will eliminate it. It is still a little unclear if it will affect those currently implementing the strategy, although some amendments to the bill seem to suggest it will only affect those looking to implement in the future.This bill...
Mary Beth Franklin, who writes extensively on issues involving social security, has published the below article on the benefits of filing for social security benefits online instead of calling or going to a physical office. With so many couples using strategies like File & Suspend, it is a great article to read if you are going to file online. One great tip for those choosing a File & Suspend approach is that you complete the online application stating that you want benefits to begin at Full Retirement Age, then in the remarks section you need to make it clear that you would like to suspend those benefits until a later time.Take a look at the link HERE for some other helpful hints.
From a planning perspective, we have found that one of the areas that tends to cause the most amount of confusion, and misinformation, is Social Security claiming strategies. Unfortunately, many of the resources available to those approaching social security age seem to only compound the problem. Employees at your local Social Security Office can be a good resource, however, it is important to keep in mind that their job is to provide you with information: They are not advisors and will not tell you what to do. How Do I Maximize My Social Security Benefits? The rule of thumb is that delaying taking benefits is the best approach, however, you do take on the risk of needing to live long enough to make up for the years you have deferred collecting benefits. Your benefit grows 8% each year you wait to begin collecting benefits after Full Retirement Age. If you...