Oct 29, 2015 @ 04:00 AM 14,189 views
New Budget Deal Is Cutting Your Social Security Benefits And It's A Good Thing

Jamie Hopkins ,

Contributor

I cover retirement income planning, retirement, and other legal issues

Follow on Forbes (48)

Opinions expressed by Forbes Contributors are their own.

Approved by the House of Representatives on October 28th, 2015, the “Bipartisan Budget Act of 2015,” contains language that will reduce potential Social Security benefits for millions of Americans. In fact, it will effectuate the single largest change to Social Security since the Citizens Freedom to Work Act of 2000, which first enabled most of the file and suspend strategies being removed by the current budget agreement. While many are writing about the devastating impact of reduced benefits, these changes will likely be beneficial to the Social Security system and to the American people. Nonetheless, reduced benefits are still reduced benefits and will have a negative impact on many people relying upon these Social Security payments.

The budget bill, as proposed by the House of Representatives, will effectively eliminate most of the “file-and-suspend” claiming strategies that exist today. File and suspend is a strategy used by married couples to simultaneously generate a paycheck from Social Security while deferring at least one of the couple’s retirement benefits into the future. Such practice allows married couples to take advantage of the deferral credits that increase Social Security retirement benefits by 8 percent per year after full retirement age and still get a Social Security benefit check each month. Not a lot of time should be spent trying to understand these strategies as they will soon no longer be available.