Changes to Social Security could impact retirement benefits

LUDINGTON – West Shore Bank is recommending that people between the ages of 62 and 66 years of age evaluate their retirement strategies due to the possible impact caused by the Bipartisan Budget Act, approved by the U.S. House of Representatives in 2015.

As a result of the Bipartisan Budget Act, certain filing strategies will no longer be available to future Social Security recipients. Restricted application and File and suspend are strategies that are utilized to increase one’s benefits significantly over the course of his or her retirement.

“Because these changes can have a tremendous impact on income over the length of a person’s retirement, we want to be sure that people are taking the time to review their options when it comes to filing for Social Security,” said Julee Sarto, investment adviser representative at West Shore Bank. “For those eligible to use these strategies, failing to act by May 1 could result in a decrease of thousands of dollars over the course of their retirement.”

File and Suspend:
For those who will be 66 years of age prior to May 1, 2016, the File and Suspend option will still be available provided they file prior to May 1, 2016. After May 1, this filing option will no longer be available to trigger benefits for a spouse or dependents.

Restricted Application:

Those who have reached age 62 or older by December 31, 2015 will still have the option to file a restricted application for spousal benefit if: a) They don’t file before they’ve reached Full Retirement Age (FRA); AND b) their spouse has either filed for and is receiving benefits OR has filed and suspended prior to May 1, 2016.

“These tactics previously allowed people to delay receipt of their benefit in order to accumulate credits for a greater monthly income after age 70,” said Sarto. “Though every situation is different, there are scenarios where the amount of benefits couples could stand to lose with these changes is substantial – potentially even hundreds of thousands of dollars over the span of a 20-plus year retirement. That change could have a huge impact on your retirement plans if you don’t act fast.”

Sarto said she recommends couples between the ages of 62 and 66 who are uncertain how the Bipartisan Budget Act might affect them contact a retirement planning specialist to review the numbers to ensure that their current planning strategy is in line with their long term retirement plans.