How Social Security Changes Affect Recipients

In November 2015, legislators in Washington voted to change the way Americans can collect their social security benefits. These changes have now gone into effect and will affect everyone who files for their benefits from now onwards.

File and Suspend no Longer Possible

One of the most important changes is that recipients can no longer file and suspend their benefits. This strategy had allowed workers to use their spousal benefits and retirement credits at the same time.Individuals who did not file their applications by April 29, 2016 can no longer do this. Those who did file their applications prior to this deadline have been grandfathered in and their benefits will not be affected by the change.

Changes to Restricted Applications

The government has raised the age at which individuals filing for spousal benefits will automatically be considered filing for one’s own benefits. The age threshold has been raised from 66 to 70. This removes the spouse first strategy that many retirees had used in the past. It means that individuals cannot allow their benefits to rest and collect delayed retirement credits past this point. Those who filed for their benefits prior to January 1, 2016 will not be affected by this change.

Increases to Take Effect

The amount of earnings required for a quarter of coverage has risen from $40 to $1260. The formula for calculating benefits has also changed. Using “bend points” for the calculation, the lower bend point has been raised to $856, and the upper bend point raised to $5,157. These changes will increase the amount of benefits an individual can collect based on a single family member’s work history.

Thresholds & Monthly Benefits Not Changing

Regulators have not changed the monthly benefit amounts that recipients qualify for. Because inflation has remained low, they have chosen not to issue a cost of living increase for 2016.

Further, the earned income limit remains unchanged. The government will still collect Social Security taxes on income up to $118,500. The earned income limit for beneficiaries collecting benefits prior to retirement age remains $15,720. Finally, the earned income limit for those reaching retirement age in the current year will be $41,880. Individuals who are planning to file for Social Security retirement or disability benefits in the coming year should speak with a Social Security lawyer in Chicago to determine how these changes will impact their applications and to begin strategizing the best ways to maximize their benefits.