In the past married individuals were able to utilize certain advantages in order to maximize their retirement benefits. The Bipartisan Budget Act of 2015 was passed last November to change these rules.
One of the best ways to increase your Social Security retirement benefits is to delay receiving them until age 70. Each month you delay receiving them from age 62 to age 70 results in a higher monthly lifetime retirement benefit. Prior to the change in the law it allowed married individuals to increase their total social security benefits by allowing one spouse to receive spousal benefits, while letting his or her own retirement benefits grow until age 70, which at that time the individual receiving the spousal benefits would switch and start taking his or her own larger retirement benefit. Under the new law if the spouse turns 62 on or after January 1, 2016 and is eligible to receive his or her own retirement benefits and spousal (or divorced spousal) benefits at the time of application, then the spouse is “deemed filing” the application for both benefits and will receive the higher of the two amounts. The spouse will no longer be able to apply for only the spousal benefits and then apply for his or her own retirement benefits at a later date. Individuals who were 62 before January 1, 2016 and are already receiving spousal benefits are grandfathered in and can still switch over to their own benefits when they reach age 70. This law does not apply to survivor benefits. Individuals may apply for survivor benefits early and then switch over to their own benefits on or before age 70.
The other law individuals utilized in the past was the ability for an individual to apply for social security benefits in order for their spouse to start taking spousal benefits. The individual would then suspend his or her benefits in order to increase the monthly payments until age 70 but the spouse was still able to receive his or her spousal benefits. Under the new law if the individual requests for voluntary suspension of benefits after April 30, 2016, the spousal benefits will be suspended for the spouse as well. Taxpayers whom submitted a request for voluntary suspension before April 30, 2016 will not be affected by the new law. There are a few exceptions to this rule. One is if the taxpayers are divorced, the divorced spouse can still receive the spousal benefits even if the ex-spouse voluntarily suspends his or her retirement benefit. Other exceptions apply when the individual receives spousal benefits and is also entitled for disabilities. Individuals should contact the social security administration to go over the exceptions.
Determining when to start taking Social Security benefits is a complex and personal decision. Please contact your KT representative with any questions when making this decision.