IN THE BUDGET passed by Congress in October 2015, there were two key changes made to Social Security, which affected both the popular “file and suspend” strategy and the use of so-called restricted applications.
Before the budget law was passed, if you opted to suspend benefits once you reached your full retirement age, your spouse and children could continue to receive benefits based on your earnings record. That remains true for those who suspended before April 2016—but under the new rules, if you suspend benefits, you will also stop the flow of spousal and family benefits.
What’s the second change? Those under age 62 as of year-end 2015 can no longer file a restricted application. This option, which was available once you reached your full retirement age, allowed a husband or wife to claim just spousal benefits, while leaving his or her own benefit to continue growing.
What if you reached age 62 by Jan. 1, 2016, and hence you can still file a restricted application? For these folks, it may make sense for the lower-earning spouse to claim benefits early. That will allow the higher-earning spouse to file a restricted application at his or her full retirement age of 66, requesting just spousal benefits—with those benefits paid based on the lower-earning spouse’s income record. The higher-earning spouse would then delay his or her own benefit until age 70, thereby ensuring both a maximum monthly benefit while alive and also a maximum survivor benefit for the husband or wife.
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