Independent Thinking^®

Changes in Social Security

Significant changes in Social Security will impact married Baby Boomers who have not yet filed for benefits. If your birthday is on or before May 1, 1950, there is still time to implement the so-called file and suspend strategy to trigger a spousal benefit. By filing and suspending, you will be able to earn delayed retirement credits without receiving any personal benefits until a later date and allow your spouse to begin receiving spousal benefits as young as age 62. You’ll have to act fast, however. The window closes on April 30, 2016.
 
In practical terms, you can apply in person at a Social Security office, by phone at 1-800-772-1213, or apply online at https://www.ssa.gov/retire/apply.html. In the remarks section of the application, write that your intention is to “file and suspend” so that your spouse can receive benefits; there is no box to check for “file and suspend.” In the application, you will also be asked to provide your spouse’s personal information. After you submit the application, a representative should follow up with you within five days to arrange to retrieve your marriage certificate. Your spouse will have to also apply online and note that he or she is applying for a spousal benefit.
 
If you have already filed for benefits or turned 62 before the end of 2015, nothing changes. Many people around this age will be affected, however, as Social Security benefits have been structured to reward those who delay filing for benefits. Each year of delayed filing past the minimum age of eligibility of 62 and before the maximum of 70 accrues payments by 8% more per year, pre-tax. Waiting until full retirement age, which the Social Security Administration calculates as either age 66 or 67, depending on your year of birth, generates 25% more per month than starting at age 62. Wait until 70 and the difference jumps to 32%.
 
As for spousal benefits, you have to be at least age 62 to be eligible to receive spousal benefits, and it is generally beneficial to wait until full retirement age. If you claim before full retirement age, the spousal benefit amount will be permanently less than the maximum spousal benefit amount, which is 50% of your spouse’s full retirement age amount. To see the amount of the reduction if you claim before full retirement age, you can use this calculator: https://www.ssa.gov/OACT/quickcalc/spouse.html.