File and Suspend and Restricted Application Strategies Are Ending Soon

As it turns out, with the passage of the 2015 budget, both File and Suspend and the Restricted Application strategies will become history very soon.  Here's the scoop:

End of File And Suspend and Restricted Application

File and Suspend will become unavailable after April 30, 2016.  The deeming rule will then apply to anyone up to age 70 who files.

The Restricted Application for spousal benefits actually will still be available, but only if you are age 62 or older by December 31, 2015.  That's because of a subparagraph in the budget bill that includes that exception.  However, if you are not in this category, the Restricted Application for spousal benefits will not be allowed.

Here are some other articles about all of this:

Los Angeles Times Money Talk

Time Is Running Out On These Social Security Strategies

New Social Security Rules End Key Filing Strategies (Wall Street Journal)

RetirementRevised:  Budget Deal Will End File And Suspend

What's File and Suspend and Why Should You Care?

One of the most popular Social Security claiming strategies is File and Suspend, also known as Claim and Suspend.  Here's how Social Security explains it.  Recently, there has been a lot of buzz about this strategy.  It's not for everyone, but if you (and usually your spouse as well) qualify, mastering File and Suspend can result in tens of thousands dollars in extra benefits - even hundreds of thousands of dollars over the life of you and your spouse.  The ins and outs are fairly complicated, and there are a number of traps that you can fall into, which can reduce the extra benefits, or, unfortunately, in many cases, eliminate it completely.  My goal is to explain this strategy in simple terms.

What's the typical scenario?

The most typical scenario involves a husband and wife, in which one of the spouses has reached Full Retirement Age (FRA) - the age that Social Security thinks you need to wait until you are entitled to 100% of your social security retirement benefit (RIB).  Social Security calls that benefit the Primary Insurance Amount (PIA).  The PIA is the basis for calculation of most social security benefits.  If you file earlier than your FRA, your benefit typically be reduced.  If you file later than your FRA, up to age 70, your benefit typically will be increased.