Managing Your Money

Budget Bill Makes MAJOR Changes to Social Security Planning


The President signed the bill into law (Bipartisan Budget Act of 2015) on November 2, 2015. The bill will eliminate sophisticated Social Security claiming Strategies such as “File-and-Suspend”. The ability for a client to file-and-suspend, while still allowing other eligible family members to claim a benefit based on that client’s earnings history is eliminated 180 days after the signing of the bill into law. Thus, by May 2016, the file-and-suspend strategy will no longer be available to clients who are not already using it.

How does the strategy “ File and Suspend” work?
Once a filer reaches their full retirement age (FRA), they are able to file for Social Security benefits, and immediately suspend payment. This allows a filer to continue to earn 8% delayed credits each year, but this strategy has other purposes. It allows a spouse to start claiming a benefit based on the original filers earnings record.

This strategy also allows the filer to request a retroactive lump-sum payment for benefits that would have been paid, back to the date of their original filing, if requested.This budget eliminates the file-and-suspend technique by changing the rules so that a filer’s family may only receive a benefit based on the filer’s earnings record if the filer is, himself or herself, receiving a benefit. The budget also eliminates the retroactive lump-sum benefit option.

The bill is also eliminating a similar strategy known as Restricted Application Strategy.
By 2020, both the file-and-suspend and restricted-application strategies will be history. Social Security claiming decisions will continue to be important, but the “advanced” planning strategies utilized by advisors will evaporate.

The file-and-suspend and restricted application strategies will soon be a relics of the past.

Bill Harris is a Certified Financial Planner practitioner. He is a member of the board of directors for the Financial Planning Association of Massachusetts and an Ed Slott Elite IRA Advisor. He is a co-founder and principal of WH Cornerstone Investments in Duxbury and Kingston: a firm dedicated to empowering people to see their future as greater than their past. Bill is passionate about empowering widows with their financial future and his award-winning email newsletter offers helpful advice and articles for widows looking to rebuild their financial and personal life. He can be reached at, 888-797-9009, @whcornerstone or @billmharris.

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