Posted on: April 19th, 2016 by The Accel Group | No Comments

What a difference a day makes — particularly when that day is April 30, 2016.

Anyone who is 66 or older by the end of April can still file and suspend their Social Security benefits by the April 29th deadline.  This suspension is permissible under existing rules that allow them to trigger benefits for an eligible family member while their own retirement benefit continues to grow by 8% per year up to age 70.  Those who file and suspend by April 29 also reserve the right to request a lump sum payout of suspended benefits instead of collecting delayed retirement credits.

For example, a higher-earning husband who is 66 or older may want to file and suspend his benefits to trigger a spousal benefit for his wife, a dependent benefit for a minor child under age 18, or a permanently disabled adult child.  Each benefit is worth up to 50% of the worker’s full retirement age amount, subject to family maximum limits.  In the meantime, the husband’s own retirement benefit would continue to earn delayed retirement credits worth up to 8% for every year he postpones collecting his benefit beyond his full retirement age up to age 70, potentially boosting his benefit by 32%.  A larger retirement benefit also translates into a larger survivor benefit for whichever spouse is left behind.

Or a worker who is 66 or older by the end of April may want to file and suspend to protect the option of requesting a lump sum payout of suspended benefits instead of collecting delayed retirement credits.  This strategy works particularly well for single people who have no spouse to collect a survivor benefit in the case of their premature death.

But anyone who requests to file and suspend their benefits beginning April 30 will face a different set of rules.  No one—not an eligible spouse or dependent child—will be able to collect benefits on a worker’s earnings record during the suspension and the lump sum payout option will disappear.  That means if an eligible family member is collecting on your benefits now and you suspend your benefits after April 29, their benefits will stop too.

These are complex rules and a significant change for anyone who is close to retirement.  If you’d like more help evaluating your options, please give us a call at 1-800-369-3525.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.  Advisory Services offered through RDA Financial Network, Inc., a Registered Investment Advisor.  Cambridge, RDA, and The Accel Group are not affiliated.