How the New Social Security Claiming Rules Affect You

Our original article that announced the Budget Bill's impact on File and Suspend generated many comments and questions. Reprinted here is an excellent question from Ann and the answer from Kurt:
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Ann: If I’ve read the new rules correctly I think my husband and I will still be able to use file and suspend/restricted application. My husband turns 68 in December and I turned 63 this past June. We both still work. My husband plans to retire when he turns 70 in two years and I’ll retire six months later at 66. My husband hasn’t applied for Social Security yet, but based on the new rules I think he now has to before April 2016 and then suspend his benefits. If he does that I believe I will be able to file a restricted application when I retire at 66 and collect on his benefit while mine continues to grow to 70. Can anyone confirm that?

Also, does anyone know how to file and suspend? I know you can apply for Social Security benefits online but the only thing I could find about suspending benefits was a paper form you fill out and mail in. I’m a little wary about doing that. Would it be better to go to a Social Security office, apply in person, and suspend at the same time?
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Ann, we asked Social Security expert and consultant Curt Czarnowski, who we recently interviewed for an article on this topic about your question. Here is what he said:
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Because she will be at least age 62 by the end of this year, she will still be able to file a restricted application and collect a spousal benefit off of her husband. And, as long as he files and suspends before next April 30th, she will be able to receive the spousal benefit even if he is not actually collecting anything because he has asked to have his payments suspended.

Here's the thing, though. He will have reached age 70 and started collecting when she hits her FRA, so his payments won't be suspended at the time she files the restricted application. Thus, he really doesn't have to worry about filing and suspending before next April 30th in order for her to collect spousal benefits. However, filing and suspending before the deadline might still be advisable in case a situation arises where he would like to have any suspended benefits repaid to him in a lump sum. If he waits beyond April 29th to file and suspend, this will no longer be an option.

In answer to the second part of her question, you "file and suspend" via the remarks section of the online application. Once you have completed the application (using the biggest, boldest font possible) you simply add a sentence in the remarks section to the effect: "I wish to have my monthly benefit payments suspended in order to earn Delayed Retirement Credits." That's all there is to it.

Thanks for the article. I am 64 and decided to take my benefits now rather than waiting to I’m 66 or 70. Here is my reasoning and I was wondering if Kurt could chime in and see if my math is right. I am collecting $1532/mth now and at 66 my benefit would be $1,746 and at 70 my benefit would peak at $2317. Lets assume I’ll live until I’m 85. My total benefits from age 64 to 85 would be $386,064. My total benefits from age 70 to 85 would be $417,060. So the difference of taking benefits now or waiting 6 years (age 70) is $30,996. If you spread that difference over the course of 21 years (252 months), I would be losing only $123 a month. If I die at 80, I am ahead of the game. My total benefit at 70 is $278,040 vs. $294,144 at 64. So, it’s all a gamble but I am willing to lose $123/mth in order to have income now for the next 6 years. I didn’t consider any cost of living increase since that isn’t a sure thing, What are your thoughts?

Kurt - the cut-off date to still implement the file & suspend option is 4/30/16. This date is 180 days from 11/1/15 when Congress passed the new regs, which I understand called for this "loophole" to be closed "at least" 180 days from date law passed. For those of us who just missed out on this option by a few months, is there any chance this 4/30/16 date might be extended, since law did not specify a date certain, but rather "at least" 180 days? IRS has not released final instructions to anyone yet, so do they have any discretion to do something longer than 180 days?
Thanks for your contributions to this great web site!

I plan to take Social Security at FRA (66) during summer 2016, and will keep working. The Social Security website says that my monthly payment will increase since I'll continue to pay into the system. Has this been changed by Congress? BTW, if my job pays me above a certain level, I won't apply for SS as long as I work, up to age 70. I'm sending out my CV in the next few weeks so I can line up a job before I leave my current one. I need to relocate to take care of my elderly father.

I was a but worried for a while until I learned that those of us who have already taken the benefit are unaffected. I took it 2.5 years ago. I only have 18 months before I collect my own SS. The extra benefit was really important to me. I feel like my contribution of staying home to raise my very young children finally got some financial recognition. I got paid about $12.5K for each of four years.

I am currently 60 and will reach FRA before my husband. My income is less overall, than his. The dates indicate that I can file as "deemed," meaning they will take my SS payout then bump me up to the spousal amount since that it higher. Will I get that total amount when I file or do I have to wait the 2 more years until he can file. Will they give me my lower amount then bump me up when he files? Still confusing, but we're trying to plan ahead.

I turned 67 this past September. My wife will turn 62 on May 1, 2016. Our plan was for me to file and suspend (my benefit is significantly greater than hers). Question: If I file and suspend by April 30, 2016, can she file in April 2016 to start getting 35% of my FRA benefit?

I am 60 and plan to begin taking survivor benefits (not sure if this is the right terminology) based on my deceased ex-husband's earning record soon. Do these changes impact survivor benefits at all?

I will turn 66 in February, 2017. Do I need to file and suspend, or just wait until 2017 to file?

I am 77 & have recently taken a part time job. Obviously I'm receiving my SSN benefits. What happens to the part time SSN taxes taken for my current job ? Thanks,

Bill

Dear Mr. Czarnowski,

I will be age 66 on April 18, 2016 and very interested in doing the file and suspend program which according to the article I will still be eligible. I have been the high earner in the marriage and intend to maximize my and my wife's survivor benefit by not taking my benefit until age 70. My wife is 5 1/2 years younger than me and will be age 60 1/2 at my 66th birthday. Can we still do the file and suspend approach? Does this make financial sense?
Thank you.

Myles Dotto

Dear Readers

We didn't want anyone to get the impression that Kurt was available on this Blog to answer individual questions. That would be asking quite a bit. Many of the queries posed here are good ones. In many cases if you read the article carefully you will get a good idea of the answer. If it is not clear you should ask your Social Security office or your financial advisor for an interpretation.

Can you confirm, if I have filed and suspended my SS benefits, so I am not having my Medicare costs taken out of my SS benefits, will my Medicare costs jump substantially? As compared to if I take my benefits and have the Medicare cost taken directly from my benefits.

I worked for SSA for 39 years, retiring in 2013. While I can respond to some of the questions, people with detailed questions about the file and suspend changes should contact SSA at 800-772-1213 between 7 am-7 pm.

I find Kurt's comment to add a suspend request to an online claim in "the biggest, boldest font possible" incredibly insulting to SSA employees. I would encourage most people to call the 800# to schedule an appointment to file by phone or in-person. The individual filing options can be complicated so online filing is not the best option fior many people.

Tom, I didn't check your math, but the way you compared your options at 64, 66, and 70 makes sense. You also have your benefits to invest, save, or spend for 6 years longer by taking them at 64 rather than 70.

Elaine C and Bill, recomputations due to additional earnings have not changed. Retirement benefits are computed using your highest 35 years of work. Earnings in past years are indexed in terms of today's dollars, however, so your benefits may already be based on 35 years of work that are valued higher than your current work. If you had less than 35 years used, the additional earnings will definitely be factored in. If a person works after receiving benefits, SSA automatically checks each year to see if additional benefits are due.

Lulu, aged spouse's benefits are intended for non working spouses and spouses whose benefit amount is less than 50% of the higher earner's benefit. It was your choice to stay home with your children when they were young. Delaying filing on your own account while receiving spouse's benefits is taking advantage of an unintended windfall, not "financial consideration" you deserve.

Flatearth6, your husband must file an application before you can receive spouse's benefits on his account. Only divorced spouses can be independently entitled without the ex-spouse filing as long as both are at least age 62.

Deb, there are no changes in survivors' benefits. A widow(er) can file on one account while waiting to file on the other account. However, only widow(er) benefits can be paid between 60-62 and only retirement benefits can accumulate delayed retirement credits. It's important that widowed people understand their options.

Gene, for "hold harmless" to apply, a person must receive benefits in November and December 2015 and have Medicare premiums withheld from those benefits. "Hold harmless" doesn't apply if you are subject to the income adjusted Part B premium. People held harmless now need to understand that future COLAs will be applied to the Part B premium until they are paying the new base amount.

As the website administrator already pointed out, questions should be referred to SSA rather than left here.

Administrator's Comment: Thanks Jean, you have been incredibly helpful to share your expertise with our members. Thanks!

Thanks for taking the time, Jean H.

Jean H - yes, thank you for taking the time to try and answer questions however, perhaps I didn't make myself clear. I was asking if I could take my own SS at FRA then take the spousal amount when my husband files - 2 years after me. Or am I locked in to my own, lesser amount forever if I file first?

I realize everyone's situation must be different and it is all "clear as mud" for most. These discussions are helpful though! Lets keep talking!

I've never heard of suspending payments! I just learned something new. I am divorced, 68 years old. I started taking my SS at age 65. I learned recently that I could have gotten SS from my divorced spouse's account (we were married for 12 years). Is it too late to file that way? I would get more per month from 50% of his SS than what I get on mine.

Thank you for any information on this, even if it is a "NO!"

Jean H., thank you sharing information. This helped me understand much more what my financial future currently is and what I can do to make it better, while still helping my father and "retiring" from my current situation. I appreciate your time and knowledge very much.

Jean
I could not have aforded the child care for my children under school age. I had no choice but to stay home with them.
My point was that I was glad that the rule did not change while I was in the middle of taking that benefit. AND IT WAS MY BENEFIT! My ex-spouse could have taken the same benefit and may have done so at the time. If the change came while I was still planning my finances for retirement then I would not have included that in my plan.
I did not join the workforce until after I had gone to college after my divorce. My ability to earn increased dramatically when I finally went to work. But I did not start working until I was 40. That means that I need to work far longer on the other end to have enough money to last retirement. As a matter of fact, I still work part-time and will continue to do so until I am 70...when I can finally take my own social security... and it will still be less than my ex-spouse.
Please don't judge another's situation. Walk a mile in their shoes.

Responding to Tom’s comment above, “So the difference of taking benefits now or waiting 6 years (age 70) is $30,996” is how I use to look at social security, from a breakeven perspective. Tom is wondering about leaving $31 thousand on the table. Then someone mentioned to me a different perspective. If you die before the breakeven date, really, what do you care? If you had been able to live as comfortably as you wanted, what would that $31k have done for you? But if you live past the breakeven date, obviously you would be better off.