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New Limitations on Social Security

A hot topic in recent weeks has been the recent changes which limit or eliminate certain Social Security claiming techniques. Social Security has always been more complicated than one might think, considering the variety of ages, relationships, amounts and other factors that apply. However, some of the techniques addressed in the new legislation are even more arcane.

Perhaps the biggest change involves the use by one member of a married couple of the file and suspend technique with the other spouse making a related filing of a restricted claim for benefits on the record of the first spouse. This approach permitted the first spouse to continue to grow his or her benefit to the maximum (age 70) while the other spouse was able to receive benefits without impacting their own. In effect the couple had their cake and ate it too by receiving benefits at the same time both were deferring the receipt of their Social Security to allow it to grow to the maximum. This was an option single folks could not manage.

The new legislation still allows use of the file and suspend technique but adds a new rule that forbids a spouse or dependent from receiving benefits from the suspended record unless or until the earner of that benefit is actually receiving benefits on their record. Complaints naturally have been raised since some persons will no longer be able to use the combined approach described above, causing them to receive perhaps significantly less money from Social Security over their lifetimes.

Interestingly, with Social Security “going broke” and underfunded for its future projected liabilities, this legislation seems a logical and not unfair way to take a very small slice out of potential obligations. After all, Congress almost certainly never contemplated the machinations that some have come up with to maximize their benefits and very certainly should not be complained of for taking steps to close the door for future claimants. In fact, we should be pleased that Congress did not go further in extending full retirement age, increasing contribution requirements for some or all earners, or reducing benefits.  

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