BASKING RIDGE, NJ- Facing down another government shutdown, the House and Senate passed a new budget deal last week that suspends the debt limit until 2017 and increases funding levels for a number of federal programs. President Obama is expected to sign the deal into law early this week.
Unfortunately, though the deal averts a debt default and reduces the risk of a December government shutdown, it includes provisions that may cut into Social Security benefits for millions of Americans. By negotiating the deal in secret, lawmakers have prevented affected retirees from having their say. To say that we're disappointed is an understatement.
The new regulations will prevent retirees from using two advanced Social Security claiming strategies: file-and-suspend and applying for a restricted claim for spousal benefits. Both of these strategies are designed to increase lifetime income for retirees and are being counted on by many Americans.
Here's what we know so far:
As of May 1, 2016, spousal or child benefits will no longer be payable unless the primary earner is also collecting Social Security benefits. Spouses will also no longer be able to file restricted claims for spousal benefits at their full retirement age.
Workers and spouses who are currently using these strategies (e.g. have already filed and suspended claims) are grandfathered in under the deal and will not be affected.
Retirees who will be age 62 or older by December 31, 2015 may still be able to file a restricted application for spousal benefits.
Retirees who will be age 66 or older before May 1, 2016 may still have time to file and suspend and trigger benefits for their spouse or dependents.
If you are eligible to file and suspend before May 1, 2016, please contact us to discuss your situation.
As always, we will update you as we know more in the coming weeks.
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