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News March 2016

Dollar Sense

Social Security Ain’t What it Was Just a Few Weeks Ago

By Teresa Ambord

Overall, the decision when to begin taking Social Security is personal. Starting too early or filing too late could greatly curtail the amount you collect. So don’t leave this critical decision to chance.

Little has changed in terms of benefits and other pertinent figures. But when it comes to the legitimate Social Security strategies that soon-to-retire folks can use, some are going the way of the dodo bird. Last November, Congress passed the Bipartisan Budget Act of 2015, which effectively closes loopholes that allowed Social Security recipients to increase the benefits they collect over their lifetimes.

Among those who are not amused by the closure of the loopholes is Boston University’s economics professor, Laurence Kotlikoff. According to Kotlikoff, retirees who have depended on these so-called loopholes have now been given the cold shoulder by Congress. Meanwhile members of Congress are high-fiving each other for their cleverness. Still, says Kotlikoff, there are some remaining strategies for increasing benefits. In this article, I’ve summarized his findings. [Plus I’ve added a sidebar summarizing the two soon-to-vanish loopholes for those who can still qualify.]

Based on his article posted on, here’s a look at Kotlikoff’s recommendations.


Retire at 70.

You probably know the best way to maximize your benefits, that is, hold off on retirement until age 70. That’s the point at which your benefits pretty much cease to grow. You could begin collecting at age 62, but by waiting until age 70, your checks should be 76% higher, which if you live to be 100, could amount to an additional $350,000 says Kotlikoff.



If you were married at least 10 years, are now divorced, and you turned 62 before January 1, 2016, you may be able to file for benefits on your former spouse’s record. The benefits will begin at your full retirement age. Then you can let your own benefits grow until you reach age 70.


Married to an Older Spouse?

This strategy applies to married couples where you and your spouse are more than four years apart in age. Also, the younger of the two of you must have turned 62 before the end of 2015. Let’s say you are the younger spouse. You may still file for full spousal benefits when you reach full retirement age, and let your benefits grow till you reach age 70. Since your spouse is more than four years older than you are, by the time you turn full retirement age, your spouse will already be collecting benefits, which triggers your ability to collect spousal benefits.


Your Older Spouse is Not 66

Suppose you turned 62 before the end of 2015, but your older spouse will not be 66 before May 1, 2016. Let’s use an example where the husband is the older spouse. He can file for retirement benefits before age 70, but after you reach your full retirement age. You can then take spousal benefits and let your own benefits grow until you turn 70. This strategy is not optimal for everyone, so talk to a trusted financial adviser to make sure it’s your best path.


Already Getting Benefits and…

You were born after January 1, 1954, but started taking benefits before your full retirement age? You can still suspend benefits when you do reach full retirement age, and let them grow till age 70. Kotlikoff says you can still achieve 32% higher benefits this way. But while your benefits are suspended, you cannot provide your spouse, ex-spouse, or disabled child with benefits based on your account.

Previously, you could file at age 62 in order to activate benefits for your spouse or your disabled child, with the intention of suspending benefits when you reach full retirement age, to let them grow till you turn 70. Suspending did not terminate benefits for your spouse or child. Thanks to the changes Congress made, this is no longer true. If you suspend your benefits, benefits for others will stop until you restart your benefits.


Lump Sum for Singles or Some Divorcees

If you are single or divorced (married for less than 10 years) and not planning to remarry, only one option changes for you, according to Kotlikoff. Let’s say you will not turn 66 until May 1, 2016, or later, but you still suspend your benefits. You will no longer be able to receive all your suspended benefits in a lump sum. For example if you suspend your benefits and then in a year or so, are diagnosed with a terminal illness and want to receive a lump sum for those suspended benefits to pay medical costs, you will be now limited. Kotlikoff says this makes suspending your benefits a riskier option. If you turn 66 before May 1 of this year and file and suspend your benefits before May 1, you can receive a lump sum of all your benefits back to the filing date (also called the “claiming date”).



Nothing has changed for you. According to Kotlikoff, you have two “best” options:

  1. Take your widow’s benefit at 60, and start your own benefits at age 70.
  2. Take your own benefits at 62 and take your widow’s benefits at full retirement age.

Actually, your options here vary depending on when your deceased spouse took benefits. Check with your financial adviser.

In Kotlikoff’s full article, there are more details, including strategies that may apply to your situation. There are also several questions and answers that might help you gain a greater understanding of your situation. You can read the full article here:

Overall, the decision when to begin taking Social Security is personal. Starting too early or filing too late could greatly curtail the amount you collect. So don’t leave this critical decision to chance. Find a financial adviser who has a good track record, and talk over the details with him or her.


You May Still Qualify, But Hurry!

The two strategies headed for the dustbin are still available to some people. Here’s a summary:



For those who are turning 66 before May 1, 2016, are married, and one spouse earns considerably more than the other, you can still use file-and-suspend. Let’s say in this example, the husband earns more. He can file benefits upon turning 66, and immediately suspend receiving them. This does two things: It allows his benefits to continue growing, and it triggers his wife’s ability to collect spousal benefits. If you qualify, don’t drag your feet. You must file before May 1. And since this year, May 1 falls on a Sunday, you must actually file by Friday, April 29th. If you file-and-suspend and let your benefits grow till age 70, your monthly checks could be as much as 32% higher than they would be if you take payments now.


Restricted Application

This strategy also involves the higher earning spouse filing for benefits (in this example, the wife is earns more). Upon reaching full retirement age, she is eligible for individual benefits, or spousal benefits, even if her husband has not reached full retirement age. She files a restricted application to receive only spousal benefits at this time. Those benefits will be about 50% of what her husband will qualify for at full retirement age. Meanwhile, her benefits continue to grow at about 8% per year, to age 70.

You can still use this strategy if you will turn 66 before May 1, 2016. You may file a restricted application anytime between ages 66 and 70. Or, if you turned 62 before the end of 2015, you may be able to file a restricted application when you turn age 66, provided your spouse is receiving retirement benefits or was eligible to file-and-suspend before May 1, 2016.


Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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