On November 2, 2015, President Obama signed into law H.R. 1314, the Bipartisan Budget Act of 2015, which made significant changes to Social Security optimization strategies. Two in particular are known as “file and suspend” and “restricted application.”
“File and suspend” provides the higher earning spouse the ability to file for Social Security benefits at full retirement age (currently age 66) and to suspend collecting benefits until age 70. This allows the higher earning spouse to increase his or her individual yearly benefits by about 32% once collection begins. By filing and suspending, the lower earner or nonearner spouse can begin collecting a spousal benefit (as much as 50%) based upon the other spouse’s record.
“Restricted application” allows a spouse with her own earnings record to begin collecting spousal benefits at or after full retirement age while suspending the collection or her own Social Security benefits. At age 70, this person would switch to her own benefits, thereby achieving the 32% yearly increase.
The budget act effectively eliminated these two strategies, with exceptions grandfathered in under the law. A spouse who desires to “file and suspend” must have been born no later than May 1, 1950. A spouse who desires to take a spousal benefit while allowing her own benefit to increase (restricted application) must have been born no later than January 1, 1954. A divorcee who was married for at least 10 years and turned 62 by January 1, 2016, can still file for a spousal benefit and then let his own benefits increase until age 70. In couples whose ages differ by more than four years and whose younger spouse will turn 62 by December 31, 2015, the younger spouse is still allowed to file for the full spousal benefit at full retirement age and then let her own benefit increase until age 70.
The act also affected other aspects of Social Security relating to divorced and widowed individuals, as well as those collecting disability benefits.
