Sunday, January 24, 2016

2016 Social Security Game Changers!!!

It's all over the internet right now, and I hope you've been paying attention!  For those of you who are at or nearing retirement age or have family members that are, there are a few changes being made to Social Security Retirement Benefits in 2016 that you should be take into consideration.

Every year it seems that there are some changes that occur, but this year there are a couple of major game changers, so please pay attention!

  1. Say goodbye to "File & Suspend"!  This is a BIG deal!  Historically, there has been a hugely beneficial money move for married couples called "File and Suspend."  This is where one person, upon the age of 66, files to claim their benefit, but suspends payment.  This means that they don't actually collect a check, allowing it to gain 8% interest per year up until the age of 70, allowing themselves to receive a much higher check when they do start to collect their check.  Then, the other spouse (lower wage earner) can claim a spousal benefit, while "filing and suspending" their own benefit (which will also start gaining approximately another 8% per year).  So, these couples have been wisely able to collect one Social Security check, while allowing their future payouts to gain interest, giving them both a higher future benefit.  This is a super smart move!  Well, this move can only be made until May 1, 2016.  Well, now, the "spousal benefit" part of that deal will go away.  You can still file and suspend in order to make your own payment higher, but while you do so, you spouse can no longer claim a spousal monthly benefit.  For further details about the official regulations regarding the "file and suspend" strategy, contact a financial planner or Social Security representative.
  2. Say goodbye to "Lump Sum Payouts"!  One feature of "file and suspend" is the ability to collect more money later.  Historically, you could either collect higher monthly payments, or choose a lump sum payout.  People that chose the later frequently received checks up to half a million dollars.  This is a huge benefit for those who run into some sort of financial pickle that is highly unforeseen (think: medical bills, etc.).  Well, the lump sum payout is also going to be no longer.  Again, the deadline for this is also May 1, 2016.

Other changes being made are important, but much more typical.  They include:
  1. Social Security payments will not see any raises in 2016.  Frequently, there is an increase for the cost of living, etc.  Well, not this year.
  2. Medicare Premium adjustments are also typical.  If they are taken out of your check, you will likely not see a difference, but please check with Social Security via their website, or a representative for individualize information.

If you or a loved one rely on Social Security, it would be wise to investigate any upcoming changes, and how they might impact your individual situations.  It seems that there is still time to take advantage of some of the Social Security features that are going away, but you will need to act quickly.

If you are reading this, and have a family member that is impacted by Social Security changes, please don't be afraid to talk with them about it.  Sometimes, it is necessary to show people in our lives that we love them, by not "minding our own business."  Besides, if they don't want to talk about it, they don't have to do so.  At least you will have done your part!