How the New Social Security Rule Could Affect You
Patience can pay off, especially when it comes to Social Security benefit collection. One play-by-the-rules delay tactic was “File and suspend,” which made the most out of waiting to tap this income source for as long as possible. But the rules have changed.
The hard-fought Bipartisan Budget Act of 2015 grabbed Social Security in its net—creating this change that lawmakers say closes unintended loopholes but could also take a bite out of lifetime benefits for some retirees. That’s because the rule change wipes out the so-called double-claiming often used by married couples 66 or older to grow their Social Security benefits.
When possible, financial planning professionals typically encourage retirees to delay claiming Social Security payments for as long as possible. Why? Social Security benefits can be claimed as early as age 62, if applicable, but you will take a 25%-30% haircut (sometimes more in a spousal situation) if you want those benefits that early.
The full-benefit starting age is 66 for people born between 1943 and 1954, and from there, goes up to age 67. But the benefit can grow if it’s deferred. Each year that payouts are delayed (up to age 70), the monthly benefit could grow by as much as 8%. In total, that monthly benefit could swell by some 75% if it’s collected starting at age 70 instead of age 62.