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Deciding When and How to File for Social Security Benefits

Deciding When and How to File for Social Security Benefits

For Those Who Are or Will Be Age 62 by the End of 2015. There are several factors that need to be considered when deciding when to file for Social Security benefits.

The first, and perhaps the most important, is the life expectancy of you and your spouse.  This factor should be upmost in your mind when deciding whether you should file before the age of 70.  If your spouse’s lifetime earnings are substantially lower than yours, your spouse is substantially younger and/or you have minor children or disabled children, we believe, generally, that filing (and suspending) as early as possible is the best option.  If you are 66 years of age or older (but under age 70), you can “file and suspend.”  By doing this, your spouse and/or minor/disabled children may be able to file for survivor or auxiliary benefits.  If you pass, you are considered to have established a benefit date and they will be able to claim higher benefits.

Monetary requirements are also an important factor to be considered.  You can be as young as 62 to file and start your benefits.  Although the monthly sum received will be substantially lower, your cash flow requirements may necessitate you considering this course of action.

Your health (and your spouse’s health) may also be a factor you have to consider.  This factor is inexorably intertwined with the first two factors as your state of health impacts both your life expectancy and your family’s financial well-being.

There are several options currently available that should be considered when looking at retirement and deciding when to file for Social Security benefits.  The rules are complicated and each individuals’ or couple’s circumstances are unique.  If you are eligible to file for benefits, HHL can help you with what may be one of the most important retirement decision you make.

The last paragraph has become a most urgent matter because of the most recent budget bill’s passage.  Within this bill was major changes regarding how (and consequently when) married couples should apply for benefits.  These changes are effective as of April 29, 2016.  If you are age 62 as of the end of 2015, your window for certain planning strategies for claiming Social Security ends on this date.  The following is a (very) brief summary of the changes:

  1. The “File and Suspend” rule will no longer be available.
  2. The “Restricted Application” in order to collect only spousal benefits will no longer be allowed.
  3. If you are 62 at the end of 2015 and have already filed (or filed and suspended) for your own retirement benefits (or do so by April 29, 2016), your spouse can still file a restricted application if he/she is also 62 at the end of 2015.
  4. The option to suspend your benefits and later claim a cumulative lump-sum (retroactive) payment will no longer be available.

Why the changes?  The “savings” from these changes will be used to minimize the Medicare premium increases for 2016 and extend the life of Social Security’s disability program.

Sources:
http://time.com/money/4105571/new-social-security-claiming-rules/
http://time.com/money/4089932/medicare-social-security-budget-deal/

Laurie B. Price, CPA, CGMA, holds a BA degree in accounting from Baldwin Wallace where she graduated Summa Cum Laude. She has more than twenty years of experience in public accounting, following ten years of paralegal experience. She has developed expertise in financial reporting; tax planning and compliance; representation before taxing authorities; accounting system analysis and design; projections and forecasts; merger and acquisition analysis; financial planning, and many related tax and financial matters.
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