File and Suspend and Restricted Applications Going Away

A couple of strategies frequently employed with social security benefits in retirement planning are known as file and suspend and restricted applications.  With file and suspend, an individual who has reached full retirement age files for social security benefits and then immediately suspends receipt of the benefits until a future date.  The person’s spouse would then claim a spousal benefit.  The benefits of the main beneficiary would continue to grow at the rate of 8% per year while suspended.  With the restricted application strategy, if the spouse had reached full retirement age and was entitled to his/her own benefits, the spouse would file for the spousal benefits only, allowing his/her own to continue to grow as well.  Under the terms of the Bipartisan Budget Act of 2015 (the Act) the ability to implement these strategies is being eliminated.  However, there are some exceptions.  For individuals who are 62 or older, by the end of 2015 the restricted application strategy will continue to be available.  Additionally, if you file and suspend within 180 days of enactment of the Act, you will be grandfathered.  If you might benefit from either of these strategies, we encourage you to speak with a competent financial advisor soon before the opportunity goes away.