The year 2016 marks an important time for changes with the Social Security system. Some of the
strategies retirees have relied on are going away and, as a result, important adjustments need to be
made to the way you approach your retirement planning.
Fact 1: Restricted application is no longer about choosing the spousal benefit first.
Before the new laws were passed, if you filed a restricted application for benefits, it meant that you
could choose to receive your spousal benefit and your own benefit would be delayed, thus
continuing to earn credits. Now, a restricted application will simply entitle you to the largest benefit
available and will not entitle you to keep earning credits.
Fact 2: File and suspend is ending.
Part of one of the most popular Social Security planning strategies was something called “file and
suspend.” With this strategy, a spouse could file for benefits and then suspend them in order to
continue delaying payments while their spouse could then file a restricted application to take their
spousal benefits while collecting delayed retirement credits on their own benefit. Now, beginning in
May, the file and suspend option will no longer be available.
Fact 3: Maximum benefits are dropping.
In 2016 the maximum Social Security benefit for a worker who retired at his or her full retirement
age was $2,663. This year, the maximum has dropped to $2,639. This makes it even more important
that retirees and preretirees find innovative ways to budget their spending and turn their personal
retirement savings into a lifelong source of income.
Fact 4: The maximum taxable earnings limit is remaining the same.
In 2015 only the first $118,500 of income was taxable for Social Security. In 2016 that limit will
remain the same. In addition, the maximum exempt earnings for those receiving Social Security will
also stay the same.
The Social Security system provides an important safety net for our nation’s retirees, but it’s
important to work your overall retirement plans around the system. To do so effectively, you need
an advisor who stays up to date on changes and who understands the various added postretirement
income tools that exist.