The End of the File and Suspend Option
File and Suspend is an option that first became available in 2000. Under this strategy, a married couple could plan for one of the individuals to initially receive a smaller check based on one-half the income of their spouse, while letting their own benefits continue to grow until age 70. At age 70, they were able to choose whichever benefit was greater. File and Suspend will no longer be an option. There is no point in explaining the finer points of this tactic, because it ends in a few weeks. It is unavailable to anyone who reaches age 62 in 2015 or beyond. Many people who were planning to use this option when they reached their retirement age will be disappointed.
Deemed Filing is Now the Option Chosen by Most Married Couples
Moving forward, when a person files for benefits anytime between the ages of 62 and 70, it will be considered a deemed filing. At that point, the beneficiary will choose between the larger of their spousal and personal retirement benefits. Up until now, retirees could only use deemed filing up until their full retirement age, at which time they had to choose between collecting benefits on their own earnings or taking the spousal benefit. Now retirees will have a few years longer to make that choice.
Because some of the rules around this are new, retirees should do more research about the deemed filing option as they get close to retirement. In addition, I cannot stress enough the importance of purchasing one of the excellent books about Social Security that are available using this Amazon.com link. It is important to realize that many of them will not be updated with the newest information for a few months. Ebooks will probably be updated the most quickly.
Fixing the Social Security Trust Fund Shortfall
The elimination of File and Suspend will cost some couples tens of thousands of dollars during their lifetime. However, this change is the first step in making sure that the trust fund does not run out of money as quickly as has been projected and it will improve its long-term financial stability.
In the future, taxpayers should expect additional changes to protect the Social Security Fund. Although no final decisions have been made, the changes will probably include small increases in payroll tax withholding and a slight rise in the full retirement age.
Benefits Will Be Lower Than Expected for the Highest Income New Retirees
Some high income retirees will be surprised to discover that they will receive about $24 less per month than they expected. According to a Social Security Administration statement, "A decrease in full maximum benefits occurs when there is no cost-of-living adjustment, but there is an increase in the national average wage index." In 2016, the maximum amount that a 66 year-old worker will receive per month will be $2,639, reduced from $2,663 in 2015.
In an effort to save money in administrative costs, the Social Security Administration will offer more online services than they have in the past. For example, beneficiaries will now be able to order a new Medicare card online, rather than being required to visit a Social Security office.
Longer Office Hours
Another change to expect at your local Social Security office is longer office hours. Most offices will be open one hour longer each day, although they will still close at noon on Wednesdays to allow employees to reduce backlogs. If you are planning to visit your local office, it is advised that you call and confirm the office hours before you show up.
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