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Social Security FAQs Find answers to fre- quently asked questions and information about popular topics regard- ing Social Security at
https://faq.ssa.gov.
Changes are coming for two Social Security strategies — the restricted benefi t and fi le and suspend. Lt. Col. Shane Ostrom, USAF (Ret), CFP®, provides an overview.
Recent legal changes eliminate strategies that allowed couples to maxi- mize their Social Security retirement benefi ts over their lifetimes. These strate- gies are known as the “restricted benefi t” and “fi le and suspend.” The restricted-benefi t strategy is elimi- nated for everyone turning age 62 in 2016 and beyond.
The spouse with the lesser earnings
record typically uses the restricted ben- efi t. To set the stage, if you apply for the Social Security spouse benefi t (50 per- cent of your spouse’s benefi t amount if you wait until your full retirement age), by law, your personal benefi t amount (based on your own earnings record) is paid before any spouse benefi t amount to bring you up to the 50-percent level. In other words, the spouse benefi t formula is actually a combination of your personal benefi t and the spouse benefi t, thereby bringing you up to 50 percent of your spouse’s benefi t amount. Just so you know, application for the spouse benefi t before your full retirement age doesn’t get the full 50 percent of your spouse’s amount. And you can’t use the restricted-benefi t method. The restricted-benefi t strategy allows spouses to collect the spouse benefi t only and not use their personal benefi t as a part of the 50-percent formula. By restrict- ing yourself to the spouse benefi t only, it allows your delayed personal benefi t to continue to grow until age 70. The strat-
egy is useful when your personal benefi t will grow to be larger than the 50-percent spouse benefi t over time. The fi le-and-suspend strategy opens the door to use the restricted benefi t. You can’t fi le for the spouse benefi t unless the spouse whose earnings record is used for the 50-percent spouse benefi t amount fi rst has fi led for his or her own benefi t. The fi le-and-suspend strategy permits a spouse to fi le for his or her benefi t, which opens the door for the other spouse to fi le for the restricted spouse benefi t and then turn around and suspend his or her personal benefi t so it can continue to grow until age 70. The fi le-and-suspend spouse has to be at full retirement age or beyond to use the fi le-and-suspend method. Elimination of the fi le-and-suspend
strategy is eff ective May 1, 2016. You still may use the strategy if you reach your full retirement age before May 1. Full retire- ment age for those born between 1943 and 1954 is 66. If you are over your full retirement age or turn 66 before May 1, talk to the Social Security Administra- tion* as soon as possible to determine your potential fi le-and-suspend options. People already receiving benefi ts under these strategies are not aff ected. MO
— Lt. Col. Shane Ostrom, USAF (Ret), is a CFP® and benefi ts information expert at MOAA. Visit
www.moaa.org/fi nancialcenter for other re- sources. Email specifi c benefi t and fi nance inqui- ries to
beninfo@moaa.org.
*more info: Contact the Social Security Administration at (800) 772-1213, or visit
www.ssa.gov. 50 MILITARY OFFICER MARCH 2016
PHOTO: SEAN SHANAHAN
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