For Some- BIG Changes in Social Security
On November 2, 2015 President Obama signed into law the Bipartisan Budget Act of 2015. While the
most prominent aspects of the bill involve suspending the national debt limit and resolving budget
issues until a new president and congress are in place in 2017, there are some other major impacts.
One of the most notable involves benefit-claiming strategies for Social Security (SS). To understand
what’s happened, it’s helpful to review how we got to this point.
In 2000 President Clinton signed the Senior Citizens Freedom to Work Act. Its primary purpose was
to make it easier for seniors- those age 65 or 66 and over (depending upon their “Full Retirement
Age” (FRA)- to continue to work without impacting their Social Security (SS) payments if they were
receiving them. Another consequence was the introduction of a new concept called “voluntary
suspension”. It allowed someone already collecting SS benefits to stop them and restart them later.
To understand the impact of this you need to know another fact about Social Security. Your benefits
continue to grow between FRA and age 70 if you don’t collect them, even if you aren’t working any
longer. The increase can be pretty significant- as much as 8% a year. Until this law passed, it wasn’t
possible to stop Social Security benefits once they started. This new option was termed “voluntary
suspension” (of benefits).
That simple concept of voluntary suspension opened up some new social security claiming strategies.
They tended to involve “claim now, claim more later” tactics. The two most notable ones are called
“File-and-Suspend” (F&S) and “Restricted Application” (RA). Both strategies help maximize Social
Security benefits for married couples who can afford to wait until age 70 to claim full Social Security
File-and-Suspend allows one spouse to claim benefits on the other’s record while that spouse delays
receipt of benefits. For instance: The husband has earned much more than the wife over the years.
She would be eligible for a “spousal benefit” equal to ½ his benefit at FRA. Under the old rules the only
way she could collect this was for him to start collecting his benefit too. The voluntary suspension
rule now allowed him to file for his benefits at FRA, immediately suspend (not receive) those benefits
and let his benefit continue to grow until age 70. Meanwhile, his wife could file for and receive spousal
benefits from his record. When he reached age 70, he’d start collecting his enhanced benefit.
Restricted Application (RA) is a little different but a variation of voluntary suspension. It involves one
spouse suspending his/her own benefits but collecting a spousal benefit until his/her benefits
maximize at age 70. So, for instance, if the husband and wife were both eligible for their own SS
retirement benefit but husband’s benefit will ultimately be higher, he could file for benefits, suspend
them, and collect ½ his spouse’s benefit until he reached age 70. Then he could switch to his enhanced
age 70 benefit.
While some may say these strategies were “scamming the system,” they were legal and readily
acknowledged and allowed by the Social Security Administration. While they required a couple to
delay receiving some benefits for a period of time, for those in good health the financial impact of
waiting for the enhanced benefits were significantly better.
However, the recent budget act has now slammed the door on these claiming strategies for most of
us. In regards to F&S, the new rule says that if you suspend benefits on your record, all benefits on
that record are suspended, thereby prohibiting anyone else from claiming any benefits related to that
record (so your spouse can’t collect spousal benefits on your record). So no more taking one and
delaying the other. The new rules do still allow you to delay starting benefits and receive the
enhanced benefits that come from that delay. They even still allow you to start benefits, change your
mind, and then suspend them to allow them to grow until age 70. In regards to the RA strategy,
Congress has extended a concept called “deemed filling.” This concept previously only applied if you
were younger than FRA. Now it applies until age 70. Deemed filing says that if you file for one
benefit (i.e. spousal benefits) you are “deemed” to have filed for all benefits (i.e. your retirement
benefits,) and you’ll collect the higher benefit. So you can no longer file for your benefits, suspend
them, and then collect spousal benefits from your spouse’s record. You’ll get the higher of the two
with no continued growth in your benefits.
This on the whole is not good for folks who are or were contemplating using one of these strategies.
For some, it will mean a change in their overall retirement income. However, in some last minute
negotiations prior to passage, some concessions were made. The two main ones are:
1. In regards to RA: the new rules only apply to individuals who turn age 62 in 2016 or later. For
those at least age 62 by 12/31/15, filing a RA will be allowed. For those who won’t be old
enough (we’re back to being little kids wishing we were older), it’s gone as a strategy.
2. As for F&S: there will be a 6 month “grandfathering” window (since date of signing) that will
allow anyone who reaches FRA within that period to use the F&S strategy. That date should
be on or about April 30, 2016. You must be FRA by then to do it. If not- even by a day- it’s
While these strategies were not applicable to everyone, for many they were a very helpful tool. We
always thought something might happen to them. President Obama had suggested doing away with
them in the last couple of budgets, but I think the speed with which Congress agreed surprised most
of us. For those of you at or near FRA, these changes and the concessions that were made mean it’s
probably a good time to review your situation and see if some action might be prudent.
PLEASE NOTE: While I’ve done my best to summarize the new legislation, it is very new and the
consequences of the changes- and even the interpretation of the legislation are still on-going. It’s a
complicated area of law at best, and everyone’s situation is unique. Please do not solely use this
article to make decisions for your situation and please do consult professional help to make sure you
understand any options or opportunities you may have under the grandfathering clauses.
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