Bipartisan Budget Bill 2015: Major Change to Social Security

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It’s hard to guess where the tax law is headed, and nearly impossible to predict the direction of Social Security. Social Security is a topic that is widely debated in politics, as well as in the homes of millions of Americans. One of the only arguments that both parties from left to right can agree on is the fact that our current Social Security system needs to change in order to sustain it. Those changes are happening.

Back in 2000, President Clinton signed into law the Senior Citizens Freedom to Work Act which was intended to increase the flexibility for seniors to continue working even while receiving Social Security benefits. The Senior Citizens Freedom to Work Act introduced a new concept called “voluntary suspension” of benefits, allowing those who had already started Social Security benefits to stop their payments and earn delayed retirement credits.

Congress saw this caused a loophole in the Social Security rules so they decided that it will no longer be possible to file and suspend and then claim just spousal or dependent benefits on the same account. With an extension of the suspension, suspending an individual’s benefits will also suspend any benefits paid to other people based on the same earnings report.

So, Congress has completely stopped the various “File and Suspend” Social Security strategies that have allowed for spouses and dependents to be paid benefits based on the higher wage earner’s account while the individual is still earning delayed retirement credits.

Congress’ crackdown on these voluntary-suspension-related tactics doesn’t actually kill the rules for voluntary suspension itself, but now it will be relegated to those unique scenarios where someone truly started benefits early, has a change of mind and wants to stop benefits to earn delayed retirement credits, with the plans of starting benefits again at age 70.

By Dan Blackwell