Gray, Gray & Gray
BREAKING NEWS: Federal Budget Compromise May Also Compromise Social Security
                      
When Congress passed and President Obama signed a federal budget deal last week, many people praised the fact that a compromise had been reached without shutting down the government. But upon closer inspection the bill that was rushed through Congress contains several hidden provisions that may have an enormous effect on Social Security recipients and those who are about to become recipients.

You need to sit down right away with a financial advisor to determine if the changes affect you, and whether or not immediate action is needed before the law takes effect. This is particularly important for two age groups:  those who will be age 62 by the end of this year; and those who will be age 66 on or before next May 1.

Age 66?
 
The biggest change tucked into the budget bill is the elimination of one part of the "file and suspend" option, which is commonly used to significantly increase long-term Social Security income. Briefly, an individual can currently file for benefits at age 66, then immediately suspend them in order to allow a spouse or dependent child to collect benefits. Meanwhile the individual's benefit can continue to grow up to age 70.

Now, however, anyone who turns 66 years old on or after May 1, 2016 who files and suspends their benefits will not be able to have family members collect on their earnings while the benefits are suspended. Spouses and dependents can only collect if the primary beneficiary is also actively collecting.

If you are age 66 (or will be before next May 1) you may wish to consider the "file and suspend" option as a way to maximize your Social Security benefits.

Age 62?
 
Under the current Social Security rules an individual age 62 or older is eligible to claim spousal benefits at age 66, allowing them to receive half of their spouse's full retirement benefit for four years, then switching to their own retirement benefits at age 70. This selection helps the individual receive a more robust monthly payment (currently 132% of the benefit if claimed at full retirement age).

However, a provision in the new budget agreement takes away this right to claim spousal benefits for anyone who turns 62 after December 31, 2015.

If you were born in 1953 or earlier, you'll still be able to claim spousal benefits. Those younger than that will lose this beneficial option. The only exception will be surviving spouses who have also earned their own retirement benefit, who can still choose their deceased spouse's benefit first and switch to their own at a later date.

If you have any additional questions about Social Security, please contact us at 781.407.0300.

We go beyond the numbers by delivering insight, guidance and success to our clients.

 

Gray, Gray & Gray, LLP
781.407.0300

www.gggcpas.com