Social Security has special age rules for retirement—by starting your benefits at Full Retirement Age, you’ll receive what’s called your full retirement benefit. If you choose to delay starting your benefit until after your Full Retirement Age, you’ll get more money each month. And, if you’re younger, you’ll receive less each month. Making this decision is huge.
Certain retirement benefits have been changed by the passing of The Bipartisan Budget Act of 2015. The changes affect your Social Security retirement benefits based upon the year you were born and/or in some cases after specific dates.
If you’ve reached your Full Retirement Age (see chart), there is provision in Social Security that allows you to file for your benefit then voluntarily suspend it.
Commonly, it’s used so that your spouse could collect a spousal benefit and then you would delay your own benefit until you turned age 70, maximum benefit age. Another benefit is that during the suspension period, you have the choice to “reinstate” your benefit back to the original suspension date and receive a lump sum payment.
These are the “old rules.” In order to be eligible to follow these rules, you must meet both of these criteria:
The “new rules” changed certain aspects of Voluntary Suspension. On or after April 30, 2016, if you “file and suspend” your Social Security benefit, your spouse and/or dependent adult child cannot receive any benefit on your record during the suspension period. You’re not eligible to receive benefits under another person’s record either. Also, there are no more lump sum reinstatement elections.
Social Security has a retirement benefit for spouses who have no or lower lifetime earnings. It’s called a spousal benefit. This benefit is a certain percentage of the “primary worker’s” Social Security retirement benefit.
The amount of the spousal benefit is dependent on two factors: spouse’s age at the time of benefit claim, and “primary worker’s” age at the time of their benefit claim. There is a distinct advantage if the spouse is at least Full Retirement Age at the time of their claim! If the spouse is under Full Retirement Age, then the options are different.
There are special requirements for spousal benefits. First, the “primary worker” must file for their own benefit. They may then immediately voluntarily suspend their benefit if they are at least Full Retirement Age and it’s before April 30, 2016.
Next, the spouse files for a spousal benefit. As long as the spouse is at least Full Retirement Age, they can SELECT 100% of their own Social Security benefit OR their spousal benefit.
Because if you started receiving a spousal benefit at Full Retirement Age, then you could switch over to your own Social Security benefit at age 70, maximum benefit age.
These are the “old rules” and will only apply to you if you were age 62 on or before January 1, 2016. Watch the explainer video above.
The “new rules” changed spousal benefit options for people who were born on or after January 2, 1954. When you file for Social Security, you will receive either 100% of your own benefit or a spousal benefit—whichever is greater. You cannot choose one or another. This is a permanent election, and you may not change to your own benefit at another time.
These changes to Social Security spousal benefits are applied to divorced spousal benefits as well.
This new law caught some people off guard, and they are faced with changing their retirement plans. It's important to stay current, and to have flexible strategies so that you won't find yourself in a bind. These benefits are complex—review your benefit options with a Social Security representative. Visit Social Security for details.
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FERS Blueprinttm is not affiliated with, endorsed or sponsored by the Federal Government or any US Government agency. FERS Blueprinttm is educational only. No specific financial, retirement nor tax advice is being offered. The material presented is as current as possible, but is necessarily generalized. Facts and opinions are based on research and experience, but are not endorsed by the Federal Government. It is recommended to consult with your personnel office and/or the Office of Personnel Management (OPM) Retirement Office, Thrift Savings Plan, Social Security, Medicare, Internal Revenue Service, your legal, tax and/or other advisor(s).