President Obama signed the Bipartisan Budget Act of 2015 on November 2, 2015. One of the Act’s key features is the inclusion of significant changes to Social Security benefits and claiming strategies. It is important to note that the basic benefits of Social Security have not changed. The calculations for a worker, spousal, and survivor benefits have not changed. What has been impacted is the use of a spousal benefit strategy that many have previously used to maximize their social security benefits.

The Social Security spousal claiming strategy that included “File and Suspend” and “Restricted Application” has now been eliminated by this Act. 

The “File and Suspend” and “Restricted Application” strategy has in the past given retirees the ability to receive a spousal benefit at full retirement age and then switch to receive their own, potentially higher, benefit later.  This allowed one to receive the spousal benefit while deferring the worker’s benefit, which could continue to grow with deferral credits.  Section 831 of the Bipartisan Budget Act of 2015 has taken away this strategy. Under the new law, the spouse will be required to file for all benefits at once and will only be able to collect on the higher amount. While this has simplified benefit claiming strategies for most retirees, it has eliminated a planning tool that we have advocated for our clients.

The effective date of the act is May 1, 2016, but we want to make you aware that the rule changes do have some grandfathering provisions for those nearing age 62 or age 66.  Specifically, anyone reaching the age of 62 by the end of 2015 can retain the right to claim just spousal benefits when they turn 66 once the other spouse either claims Social Security or if that spouse had requested to file and suspend their benefits before May 1, 2016.    

ACTION YOU CAN TAKE NOW:

If you will be 66 years or older on May 1, 2016, and you have not started your Social Security benefits, “filing and suspending” your worker’s benefits will optimize your family’s social security benefits.  If you would like us to review your situation and discuss planning options, please contact Janet Chaney at 610-444-1215. There is a limited window to make the necessary elections. We would like to complete the planning for all of our clients prior to the end of 2015 to ensure adequate time to make the proper elections with the Social Security Administration.

Sincerely,

Bill and Chad Fenstermacher
and our team at Fenstermacher & Company, LLP

Fenstermacher & Company, LLP
Pennsylvania:
115 South Broad Street
Kennett Square, PA 19348
ph 610-444-1215  fx 610-444-1635
Delaware:
3519 Silverside Road Suite 108
Wilmington, DE 19810
ph 302-478-9515  fx 302-478-0262
www.fandco.com