2016 Social Security Revisions Take Effect May 1
Posted on 04/25/2016
Contributed by: Mark A. Gajowski II, CFP®, CLU®, CEBS®
The Bipartisan Budget Act of 2015 was passed by Congress in October of 2015 and the modifications it proposes will officially take effect on May 1. These latest changes were put in place to prevent people from taking advantage of many of the optimization strategies – namely “File and Suspend”, that were often employed by financial planners, as well as many beneficiary benefits. Now there is even more taxation and less benefit for many whom have paid into the Social Security System for years, only to now receive back proportionally LESS than they were expecting.
These revisions were put into place in order to stop higher earners from using certain strategies, but it also affects lower income people. With the new law, lower-earning spouses may be forced to take reduced spousal benefits. The sooner a spousal benefit is claimed before full retirement age, the smaller the benefit will be.
Another change to the Social Security laws is that a beneficiary will no longer be able to restrict an application. Beneficiaries will be required to take the highest benefit to which he or she is entitled. Someone who earns more money than their spouse and applies for Social Security at full retirement age will no longer be entitled to receive the spousal benefit if their own benefit is higher. Naturally, any questions your best bet is speaking with us as your financial advisors / wealth managers, we can help you with this planning – even with these changes, this is still one of the largest retirement benefits most folks have. Choose wisely.