Individuals ages 66 to 70 must act fast to save thousands of dollars.
The Bipartisan Budget Act of 2015 made a major change to a popular Social Security benefit collecting strategy. The two big changes were for Restricted Applications and Voluntary Suspension, sometimes known as File and Suspend.
This strategy allows the higher earning spouse to suspend their Social Security benefits and the lower earning spouse to collect spousal benefits. This can result in the lower earning spouse collecting 50% of the higher earning spouse’s record early and likely increasing benefit collections.
At the same time, the lower earning spouse can let their own Social Security record grow. In most cases, this can be an 8% annual increase in future benefits. In today’s market, that is a very attractive rate of return. The higher earning spouse can then collect down the road, as late as age 70 and the lower earning spouse can switch at age 70 to their own record if it is more than one-half the higher earners record.
I have done calculations for several clients that have shown that this can save between $73,351 and $445,805 in lifetime dollars. When these are present valued, the numbers are still between $22,270 and $183,466. Sounds great, right? Unfortunately, the party is about to end. These strategies are coming to a close on May 1, 2016.
If you turned 66 by December 31st, though, you still have time. If you are not collecting Social Security yet, you need to look at this strategy. Social Security does not let you make this election online, so you need to contact Social Security for an appointment to make this happen. If you are not sure which strategy to implement, then please contact us and we can run a detailed report on what makes the most sense for you and your family.
If you are under 66, there are still important decisions to make on Social Security. These will not be as valuable as what needs done by May 1, but can be very impactful on the amount you and your spouse can collect for the future. Let us know if we can help in maximizing your benefits in retirement.
At H2R CPA, we are pleased to assist clients with comprehensive strategies for retirement planning and wealth management. Contact us at 412-391-2920 or email@example.com for more information.