Congress did it again.
It was tucked away in that bill. You know that bill – the bill that John Boehner gave to President Obama as his going away gift, the bill that no one read, the secret budget bill that the people didn’t get to weigh in on.
Congress and the President shut down two popular Social Security strategies known as file-and-suspend and filing for restricted claim of spousal benefits.
If you have had a financial plan done or updated in the last few years, you should check to see if your assumptions are now invalid.
We won’t get into the details of what used to be vs. what is now, but if you turn 62 in 2016 or later, you will not be able to use the old strategies. As as result, you will get less from Social Security than you would have. You may be okay if you are already doing file-and-suspend though since no one has actually seen the regulations, we can’t be sure yet.
The spousal benefits claiming strategy was popular for divorced women who could collect spousal benefits while their own retirement benefits grew until age 70. No longer (if they turn 62 in 2016 or later, or if Congress changes the rules again).
If you will turn 66 by May 1, 2016 (or are 66+ already), the rules did not change for you.
The legitimacy of the strategies can be debated, but they were the law, and for Congress and the President to eliminate them without any discussion is a reminder that all of our government benefits are subject to arbitrary removal. We rely on them at our own risk.