Changes to Social Security

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Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 11:29 am

Update 11/3/15: After several pages of discussion on this topic, we have addressed (and readdressed) the overwhelming majority of claiming situations. Please take the time to read through this discussion to see if your question has been answered already.

Below is today's article from my blog. I'm posting it here on the forum as well in the hope that it will be helpful now that we have a finalized version of the bill, passed by Congress.

The budget bill passed by Congress this week (text here) includes a number of very significant changes to Social Security. (If you’re interested in reading the law itself, Section 831 contains the relevant wording.)

There are two primary categories of changes:

1) One set of changes to the deemed filing rules (which affect the “restricted application” strategy), and
2) Another set of changes to the rules regarding voluntary suspension of benefits (which affect the “file and suspend” strategy).
Quick note for those wondering: Yes, I will be working to get an up-to-date version of my Social Security book released as quickly as I can.

Changes to Deemed Filing Rules

To explain the changes, it’s easiest to first briefly explain how things work right now, before the new law goes into effect.

Currently, if you are younger than full retirement age, and you file for either a retirement benefit or a spousal benefit, the SSA checks to see whether you are eligible for the other type of benefit also (i.e., retirement or spousal). If you are, you are automatically “deemed” to have filed for that other benefit as well. You have no choice in the matter.

This deemed filing rule is the reason that, when people want to file a restricted application (i.e, an application to collect just spousal benefits while they allow their retirement benefit to continue growing), they must wait until full retirement age in order to do so.

For anybody who will be 62 or older as of 1/1/2016, there will be no changes to this deemed filing rule or to the restricted application strategy.

For anybody who will not yet be age 62 as of 1/1/2016, however, there are two big changes.

First, the deemed filing rule will be applicable regardless of age. That is, even if you have reached full retirement age, if you file for retirement benefits or spousal benefits and you are also eligible for the other type of benefit (spousal or retirement) at that time, you will be deemed to have filed for both types of benefits. This singlehandedly eliminates the restricted application strategy for those who are affected.

Second, deemed filing will now kick in immediately for anybody when they become eligible for either spousal or retirement benefits if they’re already collecting the other type of benefit. (Previously, deemed filing only kicked in when you were actually filing for something.)

That second change is likely a bit confusing, so let’s run through an example.

Example: You file for retirement benefits at age 62, but you are not yet eligible for a spousal benefit because your spouse hasn’t yet filed for his/her own retirement benefit. Then, two years later, your spouse files for his/her retirement benefit. Under the old rules (that still apply to anybody who is 62 or older by 1/1/2016), there would be no deemed filing, because the law only checked for deemed filing on dates when you’re actually filing for something. Under the new rule, in our example when you become eligible for spousal benefits at age 64, you’ll automatically be deemed to have filed for them immediately.

Changes to Suspension of Benefits

There are also some changes regarding voluntary suspension of benefits. Specifically, for suspension of benefit requests that are submitted more than 180 days after enactment of the bill (i.e., as of 4/30/2016 or later, if I’m counting correctly), there will be three changes:

1) While your benefits are suspended, you cannot receive a benefit based on anybody else’s work record,
2) While your benefits are suspended, nobody else can receive a benefit based on your work record, and
3) There will no longer be the ability to retroactively unsuspend. (See here for a discussion of that strategy.)
The second and third changes essentially eliminate the “file and suspend” strategy as it exists now.

To be clear, the new rules do not eliminate the ability to suspend. Rather, they change what happens while your benefits are suspended. You can still choose to suspend benefits as a sort of change-your-mind option. For example, if you file at age 62 and decide at age 67 that you wish you had waited, you still have the option to suspend benefits until age 70 and collect delayed retirement credits (which would increase your monthly benefit amount).
Last edited by ObliviousInvestor on Tue Nov 03, 2015 9:29 am, edited 1 time in total.
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Re: Changes to Social Security

Post by Alex Frakt » Fri Oct 30, 2015 11:34 am

Thanks. Everyone, please post your questions about the changes to this thread. I will be locking the existing thread shortly.

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Re: Changes to Social Security

Post by livesoft » Fri Oct 30, 2015 11:38 am

I just wanted to post a BIG THANKS! to you guys for saving me a lot of investigative work. It's nice to have access to folks who have sorted this out, so that I don't have to waste time chasing down bogus leads and comments. Thanks!
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Re: Changes to Social Security

Post by rustymutt » Fri Oct 30, 2015 11:45 am

I'm with Livesoft here, thank you for your hard work on sorting through this. It's helping many people get the most from benefits.

Your work is appreciated much.
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Re: Changes to Social Security

Post by novicemoney » Fri Oct 30, 2015 11:56 am

Ditto what everyone else is thanking you for. Forgive me for being dense but what implication does this have for the common claiming strategy for married couples? That is the lower earning spouse files at 62 and the higher earning spouse files at FRA or 70? Thanks again in advance.

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Re: Changes to Social Security

Post by tfb » Fri Oct 30, 2015 12:05 pm

My quick summary:

(1) If you are under 62 by the end of 2015, and if you are married, your spouse is also under 62 by the end of 2015:
- Forget it. File and suspend and restricted application are dead for you.

(2) If you are at least 62 by the end of 2015 (switch role if you are not but your spouse is):
- You are still able to file for only spousal benefits at 66 while delaying your own benefit.
- Your spouse must be receiving his/her own benefits unless he/she fits the rule below.

(3) If you are already 66 or will be 66 in the next 180 days (switch role if you are not but your spouse is):
- You are still able to suspend your benefits if already started, or file and suspend when you reach 66, in the next 180 days.
- You probably should do so in the next 180 days especially if you are the higher earner.
- You probably should do so in the next 180 days especially if you are single and you want to preserve the option of changing your mind on delaying.
Last edited by tfb on Fri Oct 30, 2015 6:13 pm, edited 1 time in total.
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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 12:12 pm

novicemoney wrote:Ditto what everyone else is thanking you for. Forgive me for being dense but what implication does this have for the common claiming strategy for married couples? That is the lower earning spouse files at 62 and the higher earning spouse files at FRA or 70? Thanks again in advance.
Well, even for people who are affected by the new rules, it continues to be true that:
1) When the high-PIA spouse delays claiming benefits, it increases the amount the couple receives per month as long as either spouse is still alive, and
2) When the low-PIA spouse delays claiming benefits, it increases the amount the couple receives per month as long as both spouses are still alive.

So it continues to be true that it's more advantageous for the high-earning spouse to wait than for the other spouse to wait.

The difference is that now, for many people, the strategies to collect "free" spousal benefits between full retirement age will be either reduced or eliminated.
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Re: Changes to Social Security

Post by EnjoyIt » Fri Oct 30, 2015 12:24 pm

I appologize, but the jargon confuses me a little and I would like to ask a question regarding my parents.

Father 73
Mother 63

father collecting social security at 70
mother still working and waiting till FRA which is 66 when she will wants to start collecting 1/2 spousal allowing her retirement benefits to continue to grow till she is 70.

Based on the new laws which I am having a hard time understanding, can my mother still do this?
Does anything different need to happen?
Is there a better way?

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 12:30 pm

EnjoyIt wrote:I appologize, but the jargon confuses me a little and I would like to ask a question regarding my parents.

Father 73
Mother 63

father collecting social security at 70
mother still working and waiting till FRA which is 66 when she will wants to start collecting 1/2 spousal allowing her retirement benefits to continue to grow till she is 70.

Based on the new laws which I am having a hard time understanding, can my mother still do this?
Yes.
EnjoyIt wrote:Does anything different need to happen?
No.
EnjoyIt wrote:Is there a better way?
It's impossible to know what's better unless we know how long they each will live. But if they are concerned with protecting against longevity risk, the plan you outlined still seems quite reasonable to me.
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Re: Changes to Social Security

Post by harikaried » Fri Oct 30, 2015 12:32 pm

From a quick news search, it looks like suspending own to take survivor benefit is unchanged. Is that correct?

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Re: Changes to Social Security

Post by EnjoyIt » Fri Oct 30, 2015 12:35 pm

ObliviousInvestor wrote:
EnjoyIt wrote:I appologize, but the jargon confuses me a little and I would like to ask a question regarding my parents.

Father 73
Mother 63

father collecting social security at 70
mother still working and waiting till FRA which is 66 when she will wants to start collecting 1/2 spousal allowing her retirement benefits to continue to grow till she is 70.

Based on the new laws which I am having a hard time understanding, can my mother still do this?
Yes.
EnjoyIt wrote:Does anything different need to happen?
No.
EnjoyIt wrote:Is there a better way?
It's impossible to know what's better unless we know how long they each will live. But if they are concerned with protecting against longevity risk, the plan you outlined still seems quite reasonable to me.
Perfect, and thank you for posting here and helping us out. I am truly lucky to have found and be a member of this board.

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 12:45 pm

harikaried wrote:From a quick news search, it looks like suspending own to take survivor benefit is unchanged. Is that correct?
I suspect there may be some miscommunication here.

One thing that has been an option (and that still will be an option) is claiming one's own retirement benefit ASAP at age 62, while allowing survivor benefits to grow until full retirement age -- or claiming survivor benefits ASAP at 60 while allowing one's own retirement benefit to grow until 70.

With regard to suspending one's own retirement benefit while entitled to both a retirement benefit and a survivor benefit, that has never been a very common thing. (Reason being that you wouldn't receive the full survivor benefit during the period of suspension but only the excess of the survivor benefit over your own retirement benefit.) That said, that will still be an option for anybody who wants to do so and who can (and does) request suspension within 180 days after enactment of the bill.
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Re: Changes to Social Security

Post by NonnyGoGo » Fri Oct 30, 2015 12:50 pm

Adding my thanks to all the posters here. I would like some advice for the following situation:
Husband: 63 | Wife: 61, won't be 62 by 1/1/2016, never worked
They don't need the money and are in good health, so from what I read, under the old rules, he would have filed and suspended at FRA so she could collect spousal benefits. Under the new rules, they would either both collect at his FRA or when he turns 70? (Sorry if I've botched this - it's all very confusing.)

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 12:57 pm

NonnyGoGo wrote:Adding my thanks to all the posters here. I would like some advice for the following situation:
Husband: 63 | Wife: 61, won't be 62 by 1/1/2016, never worked
They don't need the money and are in good health, so from what I read, under the old rules, he would have filed and suspended at FRA so she could collect spousal benefits. Under the new rules, they would either both collect at his FRA or when he turns 70? (Sorry if I've botched this - it's all very confusing.)
You're on the right track.

You're correct that she can't start receiving spousal benefits until he actually starts receiving his own retirement benefit. Their options aren't limited to just his FRA or his age 70 though. (For example, they could also start when he is 67 and 9 months and she is however old she is at that time.)
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Re: Changes to Social Security

Post by NonnyGoGo » Fri Oct 30, 2015 1:01 pm

ObliviousInvestor wrote:
NonnyGoGo wrote:Adding my thanks to all the posters here. I would like some advice for the following situation:
Husband: 63 | Wife: 61, won't be 62 by 1/1/2016, never worked
They don't need the money and are in good health, so from what I read, under the old rules, he would have filed and suspended at FRA so she could collect spousal benefits. Under the new rules, they would either both collect at his FRA or when he turns 70? (Sorry if I've botched this - it's all very confusing.)
You're on the right track.

You're correct that she can't start receiving spousal benefits until he actually starts receiving his own retirement benefit. Their options aren't limited to just his FRA or his age 70 though. (For example, they could also start when he is 67 and 9 months and she is however old she is at that time.)
Got it! Thanks ObliviousInvestor!

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Re: Changes to Social Security

Post by MtnBiker » Fri Oct 30, 2015 1:05 pm

Link to Kitces article on this subject:

https://www.kitces.com/blog/congress-en ... trategies/

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Re: Changes to Social Security

Post by 1210sda » Fri Oct 30, 2015 2:03 pm

DW reaches her full retirement age (FRA) next year. (I'm already receiving SS)

She plans to apply for her spousal benefit at that time. Her benefit will be 1/2 or my PIA.

Four years after that, when she turns 70, she will switch over to her own benefit.

Do these new changes affect these two actions we plan to take ??

I don't believe so, but I'm asking just in case I missed something.

1210
Last edited by 1210sda on Fri Oct 30, 2015 2:06 pm, edited 1 time in total.

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 2:05 pm

1210sda wrote:DW reaches her full retirement age (FRA) next year. (I'm already receiving SS)

She plans to apply for her spousal benefit at that time. Her benefit will be 1/2 or my PIA.

Four years after that, when she turns 70, she will switch over to her own benefit.

Do these new changes affect these two actions we plan to take ??
No.
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Re: Changes to Social Security

Post by MtnBiker » Fri Oct 30, 2015 2:27 pm

Wife and I are 63. Retired early (although I still work part time), with expectation of using file and suspend strategy at FRA 66. Her SS benefit is very much smaller than mine. Being over 62, we are grandfathered into the restricted application strategy, but there is negligible benefit of that strategy in our situation. Since Congress did not grandfather in people who are 62+ for the file and suspend strategy, poof, 40K of our benefits between ages 66 to 70 are gone. That is, if I still delay taking benefits to age 70 in order to maximize payments over the long term, including survivors benefits (assuming longevity), as originally planned.

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Re: Changes to Social Security

Post by Alex Frakt » Fri Oct 30, 2015 2:33 pm

I had to remove some comments. We need to keep this to existing law, including the changes introduced in this bill (which will become law as early as Monday according to a White House spokesman: http://www.reuters.com/article/2015/10/ ... 5C20151030 ). Speculation on future changes are once again off topic as are opinions on the desirability of the bill (or lack thereof).

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Re: Changes to Social Security

Post by Boglegrappler » Fri Oct 30, 2015 2:47 pm

I guess I'm getting confused about what the currently existing options were, and didn't understand that a restricted application could be filed without someone else having filed and suspended. I think I get it now. Maybe,

In any case, I'm considering this situation.

Spouse A is FRA in December 2015
Spouse B is FRA in July of 2016

Spouse A files and suspends in Dec.
Spouse B files a restricted application for spousal benefits, in Dec/Jan.
Spouse B collects those spousal benefits until July, when they are FRA and at that time switches to own benefit, and begins to draw it.
At that time, Spouse A files a restricted application for spousal benefits on Spouse B's earnings record, and continues drawing that until age 70, at which time Spouse A switches from spousal benefits to their own record.

Result of this is that Spouse A maximizes their ultimate monthly benefit. Spouse B (younger, and somewhat higher earner) does not maximize.

This pattern does not maximize the monthly benefit after age 70, or total cumulative benefit, but it does maximize the front end collection at the expense of the later years. (I won't say why this could make sense to me.)

I'm wondering though, if the pattern for Spouse A is permitted. Spouse A can file and suspend within the 180 day period, but can the suspension continue after filing for restricted spousal benefits in July/August? If not, it would be better just to forget about the file and suspend, and just wait until Spouse B files and collects in July, and then file the restricted application, I think.

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Re: Changes to Social Security

Post by akron1977 » Fri Oct 30, 2015 2:55 pm

Our family is devastated by these changes. Husband had filed early to allow our adult disabled daughter to collect benefits, as well as myself as parent-in-care. Plan was for husband to suspend at FRA (July 2016). I am only 60 and the lower earner, due to caring for disabled daughter, se we must preserve his higher death benefit. This legislation takes that scenario off the table. Now need to figure out the next best scenario, but that looks to mean daughter and myself will be cut off from all benefits when he suspends. I know not many families will be affected by this change, but we are among the more vulnerable.

Suggestions on what our alternative strategy should be?
Last edited by akron1977 on Fri Oct 30, 2015 7:40 pm, edited 1 time in total.

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 2:55 pm

Boglegrappler wrote:I guess I'm getting confused about what the currently existing options were, and didn't understand that a restricted application could be filed without someone else having filed and suspended. I think I get it now. Maybe,

In any case, I'm considering this situation.

Spouse A is FRA in December 2015
Spouse B is FRA in July of 2016

Spouse A files and suspends in Dec.
Spouse B files a restricted application for spousal benefits, in Dec/Jan.
We have a problem right here. It is not possible to file a restricted application for spousal-only prior to full retirement age.

One alternative strategy would be for B to wait until full retirement age to file a restricted application (after A files and suspends at full retirement age). Then they both begin receiving their own retirement benefits at 70.
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Re: Changes to Social Security

Post by Allan » Fri Oct 30, 2015 3:05 pm

Mike:

What a great resource you are for the forum! And I greatly enjoyed your book on Social Security, can I assume it will be updated reflect these changes?

I am 64 + 8 months, my wife is 65 + 3 months. Our plan was to do the file and suspend when I turn 66, wife would draw the spousal benefit, then we would both take full SS at 70. How do these changes impact our plans?

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Re: Changes to Social Security

Post by Boglegrappler » Fri Oct 30, 2015 3:08 pm

So maybe the alternative that fits the objectives is for A to file at FRA, and for B to take the spousal benefit at that point until such time as its deemed prudent for B to switch to their own earnings record. A decision has been made that we need one full benefit during the period til we're seventy, so its just a question of whose it is, and who is earning the delayed credits.

Based on the other guy's blog regarding widow(er) benefits, on that count it makes more sense to have the higher earner delay.

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Re: Changes to Social Security

Post by tadamsmar » Fri Oct 30, 2015 3:14 pm

Boglegrappler wrote:I guess I'm getting confused about what the currently existing options were, and didn't understand that a restricted application could be filed without someone else having filed and suspended.
For a restricted application to be filed, someone else has to file, they don't have to suspend.
I think I get it now. Maybe,

In any case, I'm considering this situation.

Spouse A is FRA in December 2015
Spouse B is FRA in July of 2016

Spouse A files and suspends in Dec.
Spouse B files a restricted application for spousal benefits, in Dec/Jan.
Dec 2015? If that is what you mean, then B is too young. Need to be at or beyond FRA to file an restricted application.
Spouse B collects those spousal benefits until July, when they are FRA and at that time switches to own benefit, and begins to draw it.
At that time, Spouse A files a restricted application for spousal benefits on Spouse B's earnings record, and continues drawing that until age 70, at which time Spouse A switches from spousal benefits to their own record.

Result of this is that Spouse A maximizes their ultimate monthly benefit. Spouse B (younger, and somewhat higher earner) does not maximize.

This pattern does not maximize the monthly benefit after age 70, or total cumulative benefit, but it does maximize the front end collection at the expense of the later years. (I won't say why this could make sense to me.)

I'm wondering though, if the pattern for Spouse A is permitted. Spouse A can file and suspend within the 180 day period, but can the suspension continue after filing for restricted spousal benefits in July/August? If not, it would be better just to forget about the file and suspend, and just wait until Spouse B files and collects in July, and then file the restricted application, I think.

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 3:17 pm

Allan wrote:And I greatly enjoyed your book on Social Security, can I assume it will be updated reflect these changes?
Yes. I'm starting an update now, but it will take at least a few weeks, as there's a fair bit to do other than just the writing. (And the writing itself will take a while.)
Allan wrote:I am 64 + 8 months, my wife is 65 + 3 months. Our plan was to do the file and suspend when I turn 66, wife would draw the spousal benefit, then we would both take full SS at 70. How do these changes impact our plans?
The good news is that neither of you is subject to the new deemed filing rules. So one of you will be allowed to collect "free" spousal benefits via a restricted application while delaying retirement benefits until 70.

The bad news is that both of you will be affected by the new rules regarding voluntary suspension. As a result, in order for one of you to be able to start receiving spousal benefits, the other would have to actually start receiving retirement benefits (rather than just filing and suspending).

Off the top of my head, here are two strategies to consider:
Strategy one: The lower-PIA spouse files for retirement benefits at full retirement age, and the higher-PIA spouse files a restricted application for spousal-only once they're eligible to do so (i.e., once they have hit FRA and the other spouse has started retirement benefits). Then the higher-PIA spouse starts his/her own retirement benefit at age 70.

This strategy still allows the higher earner to max out his/her retirement benefit (thereby maxing out survivor benefit as well, if applicable), and it allows for a significant amount of "free" spousal benefits.

Strategy two: When your wife reaches age 70, she files for her retirement benefit, and you file a restricted application for spousal-only. Then you start your own retirement benefit at age 70.

This strategy allows both spouses to max out their retirement benefits, but it allows for fewer months of "free" spousal benefits.
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Re: Changes to Social Security

Post by Boglegrappler » Fri Oct 30, 2015 3:23 pm

Alright, I think I get the distinction and terminology now.

It seems the distinction which helps me understand is that all restricted applications are for spousal benefits, but not all spousal benefit applications have to be restricted.......only those where the spouse has his/her own earnings record and benefit. And all restricted application require a spouse who has already filed or filed and suspended.

Thanks.

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Re: Changes to Social Security

Post by Tortoise Banker » Fri Oct 30, 2015 3:31 pm

My Mom is 60, and she is a widow. She called social security a few years ago and said she'd be eligible for $1203/month when she reaches FRA under Spousal Benefit. Her own benefit would be $1660/month at FRA. If she delayed her benefit to 70, she'd be eligible for $2300/month.

She has very little savings and I am concerned about her ability to support herself. Do these changes impact her? She planned on taking survivor's benefit at FRA (66 and 2 months) and delaying her own benefit until 70. Still can?
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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 3:33 pm

Tortoise Banker wrote:My Mom is 60, and she is a widow. She called social security a few years ago and said she'd be eligible for $1203/month when she reaches FRA under Spousal Benefit. Her own benefit would be $1660/month at FRA. If she delayed her benefit to 70, she'd be eligible for $2300/month.

She has very little savings and I am concerned about her ability to support herself. Do these changes impact her? She planned on taking survivor's benefit at FRA (66 and 2 months) and delaying her own benefit until 70. Still can?
The deemed filing rules (both the existing ones and the new ones) do not apply to survivor benefits.

She could file right now for widow's benefits while allowing her own retirement benefit to grow until age 70.
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Re: Changes to Social Security

Post by 2retire » Fri Oct 30, 2015 3:44 pm

ObliviousInvestor wrote: 3) There will no longer be the ability to retroactively unsuspend. (See here for a discussion of that strategy.)
I didn't pick up on what this meant for single people, until I went over to Kitces blog and read what he had to say (with your corrections).

I believe a lot of people will think that these new rules only apply to married folks or those with dependents, but they also appear to hit single people too.

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Re: Changes to Social Security

Post by Tortoise Banker » Fri Oct 30, 2015 3:58 pm

That's great re: survivor vs spousal. Called my mom and calmed her down, thanks. She's working right now with 60000 year income (60 years old) so we figured she should apply for survivors benefits because she makes to much. Mistake?
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Re: Changes to Social Security

Post by BL » Fri Oct 30, 2015 4:05 pm

deleted. Already answered.
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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 4:06 pm

Tortoise Banker wrote:That's great re: survivor vs spousal. Called my mom and calmed her down, thanks. She's working right now with 60000 year income (60 years old) so we figured she should apply for survivors benefits because she makes to much. Mistake?
At that level of earnings, her widow's benefit would be completely withheld by the earnings test anyway (for years prior to the year in which she reaches FRA), so it's probably not a mistake to wait to file. She probably would, however, want to file for survivor benefits at the earlier of a) the date she retires or b) the beginning of the year in which she reaches full retirement age.
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Re: Changes to Social Security

Post by Allan » Fri Oct 30, 2015 4:53 pm

ObliviousInvestor wrote:Off the top of my head, here are two strategies to consider:

Strategy one: The lower-PIA spouse files for retirement benefits at full retirement age, and the higher-PIA spouse files a restricted application for spousal-only once they're eligible to do so (i.e., once they have hit FRA and the other spouse has started retirement benefits). Then the higher-PIA spouse starts his/her own retirement benefit at age 70.

This strategy still allows the higher earner to max out his/her retirement benefit (thereby maxing out survivor benefit as well, if applicable), and it allows for a significant amount of "free" spousal benefits.
So if I understand this strategy, the difference between this and our previous strategy of one of us receiving spousal benefits at 66 and then both of us waiting until age 70, is that now one spouse (probably lower-PIA spouse) files at 66 (FRA) for benefits and restricted application for spousal. Thus losing the delayed retirement credits but gaining benefits age 66-70 (and of course the spousal benefits).

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Mike Piper (Oblivious Investor) blog on SS changes

Post by bayview » Fri Oct 30, 2015 5:00 pm

[Thread merged into here, see below. --admin LadyGeek]

http://www.obliviousinvestor.com/new-so ... d-to-know/

Our Mike Piper has posted on his blog about the changes to Social Security. He is already revising his Social Security Made Simple, which I'm looking forward to.

I have not yet untangled whether this affects my plan to file for spousal benefits at my FRA of 66, delaying drawing on my own record at 70. :confused
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Re: Changes to Social Security

Post by letsgobobby » Fri Oct 30, 2015 5:06 pm

Does this make Professor Kotlikoff's "Get What's Yours" book DOA?

Were the options that were eliminated today only introduced in 2000?

This seems to be an additional disincentive to work for a spouse whose SS benefit will be less than half his/her spouse's benefit, yes? Now there is no way for the couple to benefit from the lower earning spouse's SS contributions?

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Re: Mike Piper (Oblivious Investor) blog on SS changes

Post by furwut » Fri Oct 30, 2015 5:10 pm

Already being discussed here:
viewtopic.php?f=2&t=176706&newpost=2672766

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 5:39 pm

Allan wrote:
ObliviousInvestor wrote:Off the top of my head, here are two strategies to consider:

Strategy one: The lower-PIA spouse files for retirement benefits at full retirement age, and the higher-PIA spouse files a restricted application for spousal-only once they're eligible to do so (i.e., once they have hit FRA and the other spouse has started retirement benefits). Then the higher-PIA spouse starts his/her own retirement benefit at age 70.

This strategy still allows the higher earner to max out his/her retirement benefit (thereby maxing out survivor benefit as well, if applicable), and it allows for a significant amount of "free" spousal benefits.
So if I understand this strategy, the difference between this and our previous strategy of one of us receiving spousal benefits at 66 and then both of us waiting until age 70, is that now one spouse (probably lower-PIA spouse) files at 66 (FRA) for benefits and restricted application for spousal. Thus losing the delayed retirement credits but gaining benefits age 66-70 (and of course the spousal benefits).
Yes -- with this strategy, compared to your original strategy, you (as a couple) get a few additional years of retirement benefits, but only one spouse gets the maximum amount of delayed retirement credits.
Mike Piper, author/blogger

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Re: Mike Piper (Oblivious Investor) blog on SS changes

Post by bayview » Fri Oct 30, 2015 5:41 pm

Thank you. I didn't think to look there. SS is a big part of our investment planning.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Changes to Social Security

Post by Allan » Fri Oct 30, 2015 5:50 pm

ObliviousInvestor wrote:Yes -- with this strategy, compared to your original strategy, you (as a couple) get a few additional years of retirement benefits, but only one spouse gets the maximum amount of delayed retirement credits.
Ok, thanks. This isn't that bad, at first I thought we would lose the entire spousal benefits but after your gracious explanation I've learned we only lose the DRC, but offset by the 4 years of benefits.

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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 5:51 pm

letsgobobby wrote:Does this make Professor Kotlikoff's "Get What's Yours" book DOA?
IMO, it makes every book about Social Security planning (mine included) DOA. Without updates, the books are all packed with inaccurate information.
letsgobobby wrote:Were the options that were eliminated today only introduced in 2000?
Voluntary suspension was only introduced in 2000. I'm not sure how long the wording that allows for restricted applications has been around, but it was not a part of the Senior Citizens’ Freedom to Work Act of 2000.
letsgobobby wrote:This seems to be an additional disincentive to work for a spouse whose SS benefit will be less than half his/her spouse's benefit, yes? Now there is no way for the couple to benefit from the lower earning spouse's SS contributions?
Yes, in some cases, this will provide a disincentive to work for the lower-earning spouse. This will usually be pretty minor though, as we're only talking about 4 years of retirement benefits in the first place.
Mike Piper, author/blogger

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Re: Changes to Social Security

Post by ocdokie » Fri Oct 30, 2015 6:08 pm

Wow, my head is spinning. Thanks for the explanations, Mike.

Most of the examples in this thread seem to be of spouses who are fairly close in age. My DH (64) and I (57) are 7 years apart in age. We've always planned for him, as the higher earner, to take SS at age 70. Assuming he files at 70, can I file for spousal benefits at age 63, or do I have to wait until FRA (66 years and 8 months)? I had planned to switch to my own benefit (if it will be larger than the spousal benefit, which I don't know) at age 70. Is this doable under the changes you're discussing?

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Re: Changes to Social Security

Post by LadyGeek » Fri Oct 30, 2015 6:10 pm

I merged bayview's thread into here, which is in the Personal Finance (Not Investing) forum.
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Re: Changes to Social Security

Post by ObliviousInvestor » Fri Oct 30, 2015 6:10 pm

ocdokie wrote:Most of the examples in this thread seem to be of spouses who are fairly close in age. My DH (64) and I (57) are 7 years apart in age. We've always planned for him, as the higher earner, to take SS at age 70. Assuming he files at 70, can I file for spousal benefits at age 63, or do I have to wait until FRA (66 years and 8 months)? I had planned to switch to my own benefit (if it will be larger than the spousal benefit, which I don't know) at age 70. Is this doable under the changes you're discussing?
Because you will not yet have "attained age 62" by the end of 2015, you will be subject to the new deemed filing rules.

As a result, if you file for a spousal benefit at any point (prior to FRA or after FRA) you will automatically be deemed to have filed for your retirement benefit at that point as well (meaning it would no longer continue to grow as if you had not yet filed for it).
Mike Piper, author/blogger

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Re: Changes to Social Security

Post by ocdokie » Fri Oct 30, 2015 6:17 pm

Because you will not yet have "attained age 62" by the end of 2015, you will be subject to the new deemed filing rules.
Rats! I'll re-read this thread from the beginning, because I still don't understand "deeming." I greatly appreciate you responding to my question.

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Re: Changes to Social Security

Post by noelesor » Fri Oct 30, 2015 6:23 pm

THANKS....

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Re: Changes to Social Security

Post by testing321 » Fri Oct 30, 2015 7:03 pm


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Re: Changes to Social Security

Post by The Daughter » Fri Oct 30, 2015 7:13 pm

Greetings all-

I'm still trying to digest all this. Reading the few boards on the budget bill and changes to SS and Medicare, I heard about a "restricted" filing. How is this different from filing and suspending? Here is my scenario:

Husband (lower earner) took SS at 62 because he was forced to "retire" during recession. He has been working at lower paying jobs. He is now 67. He had to repay SS due to excess earning prior to age 66.
I will be 66 in December. I filed and suspended and will receive 1/2 of hubby's benefit beginning Jan. 2016.
I will retire from my current job in January or February 2016, but I will probably continue working at something. My future work will not be particularly remunerative, more of a time filler.
I WAS planning to sign up for Medicare B when I retire from my current job in January or February.
I plan to take my "enhanced" benefit when I turn 70.

Questions:
1) Should I have done this "restricted" thing so my future work, however meager, adds to my benefit? Or is this deemed? I'm confused.
2) Husband is working and plans to continue to work. Should he suspend ASAP so his benefit will be greater at 70?
3) Should I rush to the SS office and take my own SS early so I can sign up for Medicare B to avoid the increase in the Medicare B cost? I would pay back my SS benefits in a few months, when I am safely 66. Then I would take 1/2 of hubby's as originally planned. Is this worth the bother?

Thank you so much for your comments.

The Daughter

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Re: Changes to Social Security

Post by dodecahedron » Fri Oct 30, 2015 7:27 pm

The Daughter wrote:Greetings all-

I'm still trying to digest all this. Reading the few boards on the budget bill and changes to SS and Medicare, I heard about a "restricted" filing. How is this different from filing and suspending? Here is my scenario:

Husband (lower earner) took SS at 62 because he was forced to "retire" during recession. He has been working at lower paying jobs. He is now 67. He had to repay SS due to excess earning prior to age 66.
I will be 66 in December. I filed and suspended and will receive 1/2 of hubby's benefit beginning Jan. 2016. What you are describing having done is NOT filing and suspending. If you will only be getting spousal benefits, you must have done a restricted filing.
I will retire from my current job in January or February 2016, but I will probably continue working at something. My future work will not be particularly remunerative, more of a time filler.
I WAS planning to sign up for Medicare B when I retire from my current job in January or February.
I plan to take my "enhanced" benefit when I turn 70.

Questions:
1) Should I have done this "restricted" thing so my future work, however meager, adds to my benefit? Or is this deemed? You were old enough at the time of your filing that you were NOT subject to deemed provisions. If you were ONLY applying for spousal benefits, your own work benefits should be growing until you file for them at age 70 I'm confused.
2) Husband is working and plans to continue to work. Should he suspend ASAP so his benefit will be greater at 70? That depends on factors like his health/your health.
3) Should I rush to the SS office and take my own SS early so I can sign up for Medicare B to avoid the increase in the Medicare B cost? No--Congress has addressed most of the Medicare increase in the new law anyway. It will only increase by $15/month. I would pay back my SS benefits in a few months, when I am safely 66. Then I would take 1/2 of hubby's as originally planned. Is this worth the bother? No

Thank you so much for your comments.

The Daughter
Your plans for yourself seem perfectly reasonable. I don't see that you need to do anything different. Whether your husband (as the lower earner) should suspend at this point is a trickier question. If he suspends in the next six months, you can still collect your spousal (even though he has suspended.)
Last edited by dodecahedron on Fri Oct 30, 2015 7:34 pm, edited 1 time in total.

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