Will You Be Affected By The New Social Security Rules?

| by Brendan Kelly
Social Security card with picture of lock superimposed over itSocial Security card with picture of lock superimposed over it

New changes to Social Security could potentially impact your retirement plans.

In November, President Barack Obama signed into law the Bipartisan Budget Act of 2015, which includes several significant changes to Social Security benefits. Included in the changes is a phasing out of filing strategies known as “unintended loopholes,” which were created by Congress in 2000, according to ClarkHoward.com.

If you are retiring now or even in a decade, these changes may affect you.

The closing of these "unintended loopholes" means that spouses will no longer be able to file a restricted application and receive spousal benefits if you choose to suspend your benefits. In other words, you need to be receiving your benefits in order for your partner to receive spousal benefits.

Another change is that when you reach retirement age, you can no longer choose to collect a retroactive lump sum. This law, however, only applies to people who have not reached the age 66 by April 30, 2016.

Now, how do you know if either of these changes apply to you? 

Here is a breakdown of who will and won't be affected by the new law, courtesy of ClarkHoward.com:

  • Anyone who is age 70 and up and is already receiving Social Security benefits. This group should see no change as a result of this new law.
  • Anyone who is between age 66 and 69 (and suspends their benefit) by April 30, 2016, will be “grandfathered in” and can still utilize the retroactive lump sum option. If you were not planning on taking a lump sum then these new legislative changes will not impact you.
  • Anyone who is between age 66 and 69 (and suspends their benefit) by April 30, 2016, can still have the option to suspend their benefit and allow it to grow, while at the same time their spouse can file a restricted application at full retirement age (which allows them to collect spousal benefits only).
  • Anyone who is age 62 (by December 31, 2015) will still have the option to file a restricted application (filing for a spousal benefit only) when they reach full retirement age (66) as long as either: (1) Your spouse “filed and suspended” their benefit prior to April 30, 2016 or (2) Your spouse is already receiving their lifetime benefit (anytime between 62-70).

Essentially, if you do not turn 62 before Dec. 31, 2015, you could be affected by these new Social Security rules.

It is recommended that you file your application in person and inform yourself beforehand to know exactly what you are eligible for because the Social Security Administration has the final say in interpreting the new statutes.

Sources: Rare.usClarkHoward.com / Photo credit: Dreamstime.com via ClarkHoward.com, Rare.us