This Social Security Claiming Strategy Will Soon Disappear

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Source:   —  April 22, 2016, at 10:29 PM

If you suspend your Social Security payments, spousal payments will also stop beginning April thirty.

This Social Security Claiming Strategy Will Soon Disappear

The Bipartisan Budget Act of two thousand fifteen changed the Social Security rules in several necessary ways, one of which goes into effect on April thirty, two thousand sixteen. Here'south a see at who might be able to get advantage of a Social Security claiming option that'll number longer be available beginning in May and what you can still do to maximize your Social Security payments below the new rules.

[See: ten Social Security Claiming Strategies That Work.]

Retirees who are between ages sixty-six and seventy are allowed to sign up for Social Security benefits and then immediately suspend payments. Doing this allows a spouse and dependent children to claim payments based on your work record while you continue to accrue delayed retirement credits that'll qualify you for larger payments when you restart your benefit later.

People who have already started this strategy or do so before April thirty, two thousand sixteen, will be able to utilize the elderly rules going forward. "If you suspend below the elderly rules, which are more advantageous, you obtain three rewards: Your payments expand while they're suspended, so when you resume payments they'll be at a higher level, family payments are available for spouses and children, and you can unsuspend retroactively at any point from sixty-six to seventy," says Andy Landis, author of "Social Security: The Inside Story." "You can't only resume your payments, but resume any or all of the payments you suspended. You can go back and obtain those suspended payments as a lump sum if it turns out it'south to your advantage."

After the regulation change, retirees between ages sixty-six and seventy will continue to be able to voluntarily suspend their payments, earn delayed retirement credits and boost their Social Security payments later on in retirement. "Even below the new rules, you can suspend your benefits and obtain a guaranteed eight % for the rest of your life for every year you delay," says William Meyer, founder and managing principal of Social Security Solutions, a company that analyzes Social Security claiming strategies. You could expand your monthly payments by thirty-two % if you suspend them for four years between ages sixty-six and seventy.

[See: ten Ways to Expand Your Social Security Payments.]

However, beginning on April thirty, two thousand sixteen, your current spouse and dependent children will number longer be able to gather payments based on your work record while your payments are suspended. "If you don't actually claim and gather your benefits, your spouse and dependent children may not gather your benefit," says Joseph Matthews, an attorney and author of "Social Security, Medicare & Government Pensions: Obtain the Most Out of Your Retirement & Medical Benefits." But a divorced spouse will continue to be eligible to get payments based on your work record while your payments are suspended. If your Medicare premiums are deducted from your Social Security payments, you'll obtain a bill for the premiums while your Social Security benefit is suspended.

If you voluntarily suspend your Social Security payments, you can the chosen to restart them at any time between ages sixty-six and seventy. The benefit reinstatement will start the mo after your request because Social Security benefits are paid the mo after they're due. Payments will automatically resume at age seventy if you don't create another election. Below the new rules, you cannot the chosen to get your suspended payments as a lump sum but can only restart them at a higher rate going forward. "If they wish to unsuspend their payments and request resumption of payments, it's effective the following month, not retroactively," Landis says.

[Read: How to Undo Claiming Social Security Early.]

The date you apply for the suspension will define which rules you should follow, and only people currently between ages sixty-six and 70 are eligible to apply for a suspension. "The rules for file and suspend and voluntary suspensions of payments depend totally on the request date," Landis says. "If you request suspension on or after April thirty, you're below the new rules."

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