• Your resource for learning about, comparing, and selecting the most competitive annuities since 2000.
Contact Annuity FYI by Phone 1-866-223-2121

A Change for the Worse in Social Security Is Around the Corner — But Some Can Still Sidestep It

Annuities, many of which offer lifetime income, are an excellent way to bolster your financial health in retirement. They were never meant to carry the full burden, however. Another huge component of lifetime retirement income is Social Security, and readers need to know about a key change looming that may require immediate action.

A so-called Social Security claiming strategy – “file and suspend” – has meant thousands of dollars in additional income for some older married couples. This tactic has allowed workers, once reaching the full retirement age of 66, to file for Social Security benefits but not actually take the money. Up until now, this had a key advantage: In addition to a worker earning delayed retirement credits of 8 percent a year until age 70, a spouse or other beneficiary could begin collecting benefits from his or her account because it had been activated.

Unfortunately, this is about to end – unless you turn 66 by the end of this month. If you do, you are married and want to embrace this strategy, you must file for this benefit by April 29. Bear in mind that your spouse must be at least 62 to receive spousal benefits. (We’ll tell those interested in this strategy how to actually execute it shortly.)

Another Social Security claiming strategy on the chopping block is called a “restricted application.” This allows a spouse to claim just a spousal benefit – typically between the ages of 66 and 70 — while their own frozen Social Security benefit grows in value at 8 percent a year. This option, unfortunately, has ended for all couples born after 1953.

(For more information, visit www.ssa.gov/planners/retire.)

A law permitting Social Security to initially enact these strategies was passed in 2000. They were intended to encourage older workers to stay on the job and delay claiming benefits. But over time, the strategies become extremely popular and hence expensive for the government, and so Social Security officials began viewing them as loopholes. In his 2014 budget, President Obama vowed to get rid of these “aggressive” strategies. Last November, the made good on his promise and set the stage to eliminate them in the Bipartisan Budget Act of 2015.

Couples already benefitting from the “file and suspend” strategy are not affected by the changes. And those who are at least 66, married and also interested in benefitting have to pursue one of two options immediately. Either call (800) 772-1213 to set up a phone or in-person application session or file for Social Security benefits online at https://secure.ssa.gov/iClaim/rib and request “file and suspend” benefits.

(There is also a minor “file and suspend” benefit for single workers who meet the April 29 deadline. Generally, Social Security doesn’t pay more than six months’ worth of benefits retroactively. There is no limit, however, for those who are 66 if they “file and suspend” by April 29. If you do so and at, say, 68 ½ decide that things have changed and you need money retroactively, you could collect two-and-a-half years of benefits you earned in a lump sum.)

Whether you call Social Security or go to its web site, each approach has some minor irritants. Calling the phone number above may require spending up to an hour online to make an appointment that could be days away, financial experts say. The online application might be the better alternative, even though it doesn’t actually offer the “file and suspend” option. You have to note in the “comments” box your intent to opt for it, thereby documenting that your request was made by the April 29 deadline.

While it’s unfortunate that these beneficial loopholes are disappearing for select Social Security recipients, overall Social Security clearly remains a welcome component of retiree financial planning.

It not only provides lifetime income for Americans but also keeps pace with inflation. For couples or individuals in good health and no reason to expect a short life expectancy, it makes the most sense to delay payments as long as possible (to age 70), if you are in a financial position to do so. This maximizes monthly payments for life (and perhaps the life of spouses collecting survivor benefits).

This delay can improve your retirement outlook, especially if you live into your late 80s or 90s — as women, in particular, commonly do if they make it to age 65 in good health. There are concerns about the long-time solvency of Social Security if changes are not made. But financial planning experts say possible changes down the road will almost certainly will not impact today’s retirees.

Share Button

Copyright ©2022 AFYI Holdings Group, LLC. All Rights Reserved. No part of this article may be reproduced without the express written consent of AFYI Holdings Group, LLC.

Annuityfyi.com - Prefooter


Mailing Address:

1165 NE 105 St.
Miami Shores, FL 33138




(866) 223-2121

Follow Us On

Click for the BBB Business Review of this Annuities in Miami Shores FL

Copyright © AFYI Holdings Group, LLC, All Rights Reserved

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest