WASHINGTON, Nov. 18, 2015 - Millions of Americans approaching retirement will be affected by changes in claiming Social Security benefits that Congress included in its recent budget agreement, including many people who will want to make decisions before a crucial deadline next May 2.
Demographics in the agricultural sector suggest the changes are sure to affect the Social Security filings and retirement calculations for a lot of farm couples: Around 30 percent of farm operators are 55 to 65 years old, based on Census of Agriculture data.
The basics for claiming haven’t changed. Folks can still claim as early as age 62 or let their benefit rise 8 percent each year up to age 70 before claiming. Further, they’ll still be able to collect the larger of the benefit based on their work history or one based on a spouse or ex-spouse. Note, too, that the changes won’t alter any benefits already being paid by May.
However, two strategies that Congress slipped into the law in 2000, and have since allowed many couples to boost their total lifetime benefits, will disappear. The first is called “file and suspend.” It now allows people age 66 or older to file for benefits and then quickly suspend them, allowing their own entitlement to keep rising annually, but thereby making a husband or wife eligible for a spousal benefit. People can lock in that strategy through next April; not after.
Also getting the ax is the “restricted spousal benefit,” often called, “claim now, claim more later.” It means that a person who is at least age 62 by Dec. 31, 2015, and whose spouse or ex-spouse is at least 66 and has filed for benefits, has the option to claim just the spousal benefit, while allowing the regular entitlement to keep rising. This option also ends next May.
Pat Wolff, tax and budget expert for the American Farm Bureau Federation, says it doesn’t appear that the changes will affect farmers differently than anyone else.
Meanwhile, Jamie Hopkins, retirement income expert at The American College, says the changes are the biggest to Social Security since 2000 and “they will be felt mostly by high-income individuals that could afford to delay the majority of their Social Security benefits to age 70. Most Americans claim their benefits before full retirement age,” so the strategies being dropped are not utilized much nationwide. Nonetheless, he notes, the changes may prompt some people to claim their benefits (or file and suspend) before the May 2 deadline in order to trigger spousal benefits for a younger spouse.
Most of these changes are not entirely surprising, Hopkins says, and President Obama’s budget proposals in recent years have spoken of reining in “aggressive claiming strategies.” Some reductions in benefits will surely be made “to secure the future of Social Security.” So, he says, “These are not the last changes that will occur to Social Security.”
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