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“Recent changes to the rules for claiming Social Security are forcing some couples to reconsider their strategy.”

Patrick S. Donnelly, CFP®

Vice President & Senior Financial Counselor

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Have You Considered the Upcoming Social Security Deadline?

Social Security claiming strategies are centered around the decision of whether to claim benefits as early as age 62, at your full retirement age (typically age 66 to 67), or as late as age 70. For every year you defer, the benefit can grow by as much as 8%. Married individuals are entitled to their own benefit or a spousal benefit (a benefit equal to 50% of your spouse’s benefit). The decision for couples has been complicated further by the concept of voluntary suspension, which led to two claiming strategies that have recently been deemed loopholes.

The claiming strategies being eliminated are “File and Suspend” and “Restricted Application” (the latter is also referred to as “claim now, claim more later”). Nevertheless, individuals who are 66 or older and have yet to file for Social Security, or individuals who are turning age 66 on or before 4/29/2016, still have time to act before the file and suspend option disappears.  Individuals who reached age 62 by 12/31/2015 will continue to be able to file a restricted application; however, this option has been eliminated for younger individuals.

File and Suspend – Must be filed by 4/29/2016

If you turn 66 on 4/29/2016 or earlier, you can still file using this claiming strategy.

Here is how the strategy works. Upon reaching full retirement age, you file for Social Security retirement benefits and then immediately suspend them. Because your benefits are filed, your spouse becomes eligible for spousal benefits (spousal benefits cannot be claimed until the primary worker also files for benefits). However, because your benefit was suspended, and therefore not actually received, you can still earn delayed retirement credit increases for waiting (currently, approximately 8% per year).

Going forward, if you suspend your benefit, you will suspend all benefits payable to other individuals based on your earnings record, so spousal benefits cannot be claimed.

While the primary function of file-and-suspend was to allow your spouse to apply for spousal benefits while you delayed your own retirement benefits, a secondary function enabled you to retroactively claim all benefits going back to the date of the original suspension if you changed your mind. This option is going away as well, but those who suspend prior to the 4/29/2016 deadline will be grandfathered.

Restricted Application – Must be age 62 by 12/31/2015

For those age 62 or older in 2015, or someone born on 1/1/1954 who technically “attains” age 62 on 12/31/2015, the ability to file a restricted application is grandfathered. This means that if you are receiving a spousal benefit under a restricted application, you can continue to do so. In addition, if you’re not receiving a spousal benefit yet but planned to file a restricted application for it in the future, you can still do that too.

While the purpose of file-and-suspend was to allow your spouse to receive spousal benefits while you delayed your own benefit, the purpose of the restricted application was for your spouse to receive spousal benefits while delaying their own individual retirement benefit. This is also referred to as “claim now, claim more later,” because your spouse’s own benefit grows by 8% while they are collecting a spousal benefit on your earnings record.

Going forward, individuals born after 1/1/1954 who apply for multiple benefits will simply receive whichever provides the biggest benefit check.

When and how to claim Social Security, which for many people is one of their largest income sources in retirement, is a complicated and personal decision involving many variables. The elimination of these two claiming strategies removes some options for couples, but it does not diminish the importance of how to approach Social Security. In order to assist our clients with the optimum claiming strategy, we run pertinent information through a software program that assists clients in maximizing the benefit that they may be eligible to receive.


Patrick S. Donnelly, CFP®

Patrick is a Senior Wealth Advisor and a Principal of The Colony Group with extensive experience in counseling high net worth individuals in all areas of financial planning, including cash flow management, investment allocation and management, retirement planning, insurance, and tax planning.

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