Retirement Planning Services in Phoenix Help You Understand Recent Changes to Claiming Strategies

You may have heard about Congress and President Obama reaching an agreement on the budget. This past November, the President signed the Bipartisan Budget Act of 2015. However, many people are unaware of the significant changes – the biggest in the past decade — to Social Security that were included in the new budget.

The budget eliminates two major claiming strategies for Social Security. The purpose of the change was to help improve the overall financial condition of Social Security. But as a result, many Americans will lose a large chunk of future Social Security income.

In a nutshell, these are the changes that took place:

  1. Extension of the deemed filing rule from full retirement age to 70 – For everyone who has not reached 62 by year-end 2015, you will not be able to take advantage of certain worker and spousal benefits. If you were eligible for both a worker’s and spousal benefit prior to the rule change, you could claim benefits before full retirement age and receive the larger of the two benefits. If you waited until full retirement age, you could select the spousal benefit and defer your worker benefit. Your worker benefit could then grow until you turn 70.

Using this strategy allowed you to receive income today and also receive a deferred worker’s benefit at age 70. The rule change means you will now receive the larger of the worker’s benefit or spousal benefit when you file You will not be able to defer one of the benefits and allow it to grow until you reach 70.

  1. Eliminating the “file and suspend” strategies – You also are no longer able to voluntarily file-and-suspend your Social Security benefits to create a spousal benefit or protect your right to file for retroactive benefits. Before the change, the higher income earner of two working spouses could file-and-suspend.

By doing this, the spouse could collect benefits based on the higher earner’s record. Then, the higher earner could continue to earn delayed retirement credits on their individual benefit. If you are currently 66 or will reach age 66 before May 1, 2016, you can be grandfathered in and still use the file-and-suspend benefit.

Social Security makes up a portion of every working American’s retirement income. However, claiming your Social Security benefit is a complex process. You should work with an advisor to determine the strategy that will work best in your situation, especially with these sweeping changes.

WealthTrust Arizona provides sound strategic recommendations to help clients reach their retirement planning goals. Whether retirement is a long way off or just around the corner, we work to preserve and grow your wealth so you don’t outlive your money. We develop a plan that considers your current assets, tax planning and risk management.

To learn more about retirement planning services, call for a free consultation at 1-480-483-7300. You can also visit our website for more information.