Quick Comment – Big Changes to Social Security

The proposed Federal budget deal making its way through Congress this week lays out one significant change to Social Security: the elimination of “file & suspend” strategies.

Under file & suspend, a spouse could file for social security retirement benefits, but then “suspend” those payments until a later date (allowing their future benefit amounts to continue to grow, often by as much as 15% per year through age 70).  Why file if you won’t be taking the payments?  Because the act of filing allows the second spouse to begin to receive social security income based on the first spouse’s benefit amount.  This strategy has been typically used when the first spouse is 1) older than the second, and/or 2) the first spouse’s income during working years was higher than the second.

But under the proposed budget agreement, file & suspend strategies will no longer be offered.  Additionally, any second spouse receiving social security spousal income while the first has suspended payments will be “cut off,” eliminating this benefit until such time that the first spouse begins taking social security income.  The proposed cut-off date will be 6 months after the bill is signed.

We expect that if passed and signed into law, this significant change will impact the planning of many pre-retirees, and will certainly impact those retirees already receiving spousal benefits.  It will also disproportionately affect women who overwhelmingly will stand to lose the lion’s share of spousal benefits originally meant to compensate for time spent out of the workforce to raise children.

As always, we stand ready to update any client’s financial plans that may be affected.  Please call our office to speak with your Appleton Group advisor to schedule a time to visit today.

By | 2016-01-07T11:59:31+00:00 October 28th, 2015|Quick Comment|Comments Off on Quick Comment – Big Changes to Social Security

About the Author:

Mark’s commitment to objective, independent wealth management led him to establish The Appleton Group LLC in April of 2002. With over 19 years of experience in the financial services industry, Mark serves as portfolio manager for our private client group, and co-manages all assets held in our suite of portfolio offerings. His responsibilities include risk analysis, asset allocation, market research, and institutional client development. Mark also serves as both Principal and CEO of The Appleton Group LLC. He earned his Accredited Investment Fiduciary (AIF) designation in 2016