Social Security changes reduce options

In November, when many were already focused on the holidays, very quietly, much as the Grinch stole Christmas, changes were made to Social Security when President Barack Obama signed the Bipartisan Budget Act of 2015.

Here’s what happened.

• File and suspend: Under the old rules once you reached retirement age you could file for benefits so a spouse or dependent child could file for a spousal or dependent benefit. You could then suspend your benefits, in order to accrue delayed retirement credits and claim an increased worker benefit at a later date, up to age 70. “For some couples and families, this strategy increased their total lifetime combined benefit,” explains Anthony Leonardi, founding partner of Paladin Family Wealth in Rye Brook.

Now, for suspension requests submitted on or after April 30, the worker can file and suspend and accrue delayed retirement credits, but no one can collect benefits on the worker’s earnings record during the suspension.

• Restricted application for spousal benefits: You applied for benefits based on your spouse’s record while delaying your own Social Security benefit. The advantage — getting 50 percent of your spouse’s benefit amount while continuing to earn delayed retirement credits of 8 percent a year, up to age 70. Say goodbye to that too.
• Should you worry? Much depends on your age. Talk to your financial adviser soon. “There are a lot of moving parts to this, and tax ramifications,” says Joseph Bellmar, a financial advisor with Lynch, Sacco, Montagnino Wealth Management Group of Wells Fargo in Woodbury. Who’s likely to be most affected? “Married couples in their 60s with more means, who work the longest and are looking for the greatest spousal benefit.”