Social Security file and suspend changes

[Matt]

This morning the senate passed a 2 year budget bill which includes a provision to address what is termed a 'loophole'. It relates to benefits for those who file and suspend. The pertinent sections are:

Section 831 (a) - anyone who files for any benefit is deemed to have filed for all benefits.
Section 831 (b) any benefits for an auxiliary (spousal payments) must be stopped when primary suspends.

Prior to this people have one spouse file and suspend payments to accumulate a bonus to payments of upto 8% per year for 3 years. This bonus is then retained throughout the remainder of their natural life. This strategy now requires a complete revaluation.

Note that the 'deemed' part refers to the age of the person. It only applies to those 62 or under today. For those who are near that age and have a plan in place for file/suspend, you'll need to start it over again.. I chatted with a team today who provides advisor tools for SS analysis and they informed me they are recoding their product over the weekend, and all advisors should create new plans based on this.

Note it still requires POTUS to sign off, but that seems a given.

Full Document Attached, pertinent pages from 72.

asshat-FQF

 

[GettingReady]

Sounds like restricted applications will also be affected for those under 62 in Jan. My dh is 64, so I think we're still good to go unless something else changes. Our current strategy was for me to file at 62, him to file and restrict, and then file on his own at 70.

 

[Matt]

Sounds like restricted applications will also be affected for those under 62 in Jan. My dh is 64, so I think we're still good to go unless something else changes. Our current strategy was for me to file at 62, him to file and restrict, and then file on his own at 70.

It may also apply to you... you're very much in the 'must look further zone' if you aren't over 62 already. I'm going to be trialing some solutions on this next week that might help confirm.

 

[GettingReady]

Okay, thanks. I was thinking it wouldn't apply since he is the one that would be filing a restricted application and he's over 62. In our case it's a difference of $900 a month. Not a deal breaker as we're only looking at that additional amount for 2 years, but still something to take into consideration.

 

[Matt]

Okay, thanks. I was thinking it wouldn't apply since he is the one that would be filing a restricted application and he's over 62. In our case it's a difference of $900 a month. Not a deal breaker as we're only looking at that additional amount for 2 years, but still something to take into consideration.

You're probably right. These days I like to tackle things in two ways though, especially when they are important:

1.. My interpretation of it.
2.. Another person's interpretation of it

The latter being a professional, or a software solution sold to professionals.

I don't rely on either fully, but they are good ways to catch things that require real focus and digging to clarify.

 

[Saphira2021]

I am watching this thread carefully as this is something i was not aware of and DH didn't think it applied to us, but it is possible he didn't understand completely. i am having trouble understanding what the loophole was and what can be done about it now. i think the second part is still in the air, but what about the first. any reading advice would be appreciated.

Matt, thank you for bringing this to my attention.

 

[GettingReady]

I know Mike Piper said he'd be updating his book.

http://www.oblivious dot investor.com/

He's on the bogleheads forum and often answers questions.

 

[Saphira2021]

I know Mike Piper said he'd be updating his book.

http://www.oblivious dot investor.com/

He's on the bogleheads forum and often answers questions.

ah! great read, thank you. was not aware of either place. will read with DH. thank you so much

 

[GettingReady]

Saphira, I've learned so much about financial/retirement planning from that forum. I spent a couple years there devouring every word. Be sure and check out their wiki. Now I'm consumed by this forum! Lol

 

[Saphira2021]

Saphira, I've learned so much about financial/retirement planning from that forum. I spent a couple years there devouring every word. Be sure and check out their wiki. Now I'm consumed by this forum! Lol

i will do the same. my early retirement date is 1/5/16. not by age but by the "lucky for me" provisions at my "used to be" employer. i don't have to work, but now need to get familiar with what needs to be done.
thank you for good advice and pointing me to those places.

 

[Andres]

Some people's interpretation is that those who turn 62 before the law is signed (around May 2016) will be good to go with File & Suspend. I'm too young, so I get screwed

 

[Matt]

Some people interpretation is that those who turn 62 before the law is signed (around May 2016) will be good to go with File & Suspend. I'm too young, so I get screwed

Maybe if they don't change it.. there won't be SSI when you are ready to claim it?

 

[Andres]

Maybe if they don't change it.. there won't be SSI when you are ready to claim it?

Probably. I'm not that well informed about the financial health of Social Security. Young people should expect to receive less in SS benefits than the current generation. Me, I see SS as a nice bonus. If it is there, I'll take it. But I'm not counting on it for retirement.

 

[AnxiousRetirement]

I'm probably just naive, but I figure SS will be pretty much saved with only minor changes made. Now, those on SSI or SSDI probably won't fare too well because the screwing poor folks & disabled folks isn't too uncommon...sigh.