How Will the 2015 Changes to Social Security Affect You in 2016?

Older couple standing on gold coins

For many, Social Security plays a big part of their retirement planning, so much, that they may require the advice of an attorney for Social Security. This year there are significant changes to the program because of the Bipartisan Budget Act of 2015 and current economic factors.

Elimination of Unintended Loopholes

Until now, some married couples have been able to take advantage of claiming strategies under the advice of their attorney for Social Security. With the new changes:

  • Dual-earner married couples are no longer permitted to claim their Social Security benefits twice. Previously, a spouse could collect payments that were worth half of the higher earner’s benefits and then switch to payments that were based on their work records later. By switching, the spouse would then benefit from a higher payment because they were then older at the time of the delayed claiming. Beneficiaries who turn 62 during 2016 or later will be restricted to choosing between the spousal payment and their own work record.
  • Dependents can no longer claim payments on the beneficiary’s work record if the beneficiary has chosen to suspend payments. Once the payments have been suspended, so will the payments to the dependents. This change takes effect in May 2016. Once payments have resumed, the retiree will received a higher rate because of accrued delayed retirement credits.

Some Claiming Options Remain

Some strategies will remain unaffected by the Act:

  • The lower earning spouse is still eligible to claim payments that can be worth up to 50 percent of the benefit of the higher earning spouse
  • The survivor’s benefit will remain in effect allowing widows and widowers to receive their deceased spouse’s benefit in lieu of their benefit if it higher.
  • By delaying filing for Social Security payments until age 70, beneficiaries will still be able to receive a higher monthly payment.

Consequences of Low Inflation

Because of the economy, Social Security beneficiaries will see a few changes this year with their payments:

  • With very little inflation in 2015, there will be no automatic cost-of-living adjustment (COLA) to Social Security payments during 2016.
  • Because there is no COLA in 2016, the maximum amount of earnings that are subject to the Social Security tax will stay at $118,500.
  • Premiums for Medicare Part B are expected to increase for retirees who sign up for Medicare, in addition to those who have higher incomes. Existing beneficiaries are protected from this increase.
  • It is expected that the maximum Social Security payment in 2016 will be $2,639, which is $24 less than the previous year. This is related to there being no COLA In 2016.