Wednesday, March 30, 2016

Social Security Changes – Review Your Clients’ Benefits Before April 30!

By Dina Mestel, Sales Trainer

It has long been clear that changes to Social Security would be necessary in order for benefits to continue for generations to come. The question surrounding a solution has always been when will this occur and in what form? Some answers were given when President Obama took the first steps to reduce Social Security deficits by signing the Bipartisan Budget Act of 2015.[1] This legislation was signed on November 2, 2015, and will apply to Social Security applicants starting May 1, 2016. The next several months mark an important transition period and the new legislation may make financial planning for retirees a little trickier. Don’t let these changes stand in the way of helping your clients now. 

Here are a few things you need to know about some of the changes to certain Social Security claiming strategies.

The first change is that individual workers can no longer use the “file and suspend” strategy to begin a spousal benefit for the other spouse, or to begin a benefit for a qualifying dependent child if they are not receiving benefits themselves. Currently if a client will be age 66 or older before April 30, 2016, and has not started their Social Security benefits, they may consider filing and suspending their worker benefits by the required deadline. If they meet the eligibility requirements, the workers’ own benefit would then grow by delayed retirement credits (currently 8% per year) until age 70.[2] If the worker does not file before the April 30, 2016, cutoff, this strategy will no longer be available.[3]

The new law also changed another strategy used by married couples called “filing restricted” or “filing to receive only a spousal benefit.” If a worker is married and reached the age of 62 by the end of 2015, that individual may be entitled to both a spousal benefit and a workers’ benefit at different times. In this scenario an individual waiting until full retirement age has the option to receive a spousal benefit and then switch to their own workers’ benefit at age 70. This is advantageous because the individual receiving the spousal benefit can defer their workers’ benefit, allowing that benefit to grow with deferral credits. Based on the new law, anyone filing for benefits will receive
the larger of either the workers’ or spousal benefit only.[4]

This new law applies to all applicants after April 30, 2016. If a worker would benefit from one of the claiming strategies that are due to change, there may be an opportunity for them to take action. They can be grandfathered and any spousal or dependent benefits will continue unaffected by the new law as long as they have met the deadlines and eligibility requirements.[5] Since Social Security is a key component for retirement income planning, this creates an enormous but time-sensitive opportunity for any financial professional to potentially make a big impact on their clients’ retirement income.

Ann Arbor Annuity Exchange is here to offer you, the insurance-licensed financial professional, additional support and resources on the matter. Contact us for a complimentary copy of any or all of these three tools: 1) valuable 2015 Bipartisan Budget Act talking points, 2) quick-reference guide to strategies and deadlines, and 3) a Social Security income benefit strategies brochure. When you call, be sure to also ask an AAAE marketer about three techniques that can help you integrate Social Security topics into your insurance marketing.

Dina Mestel | Sales Trainer
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x119 | Dir: 734.786.6119

Please note that the information provided has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Ann Arbor Annuity Exchange. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual. Clients should seek guidance from the Social Security Administration regarding their particular situation. For more information, please direct your clients to a local Social Security Administration office, or visit

This material is not approved, endorsed, or authorized by the Social Security Administration.

Ann Arbor Annuity Exchange is not affiliated with the U.S. Government or any governmental agency.

[1] “Congress Passes H.R. 1314, the Bipartisan Budget Act of 2015” Social Security Legislative Bulletin Number: 114-8. 3 Nov 2015. Office of
Legislation and Congressional Affairs. Social Security Administration. Web. Accessed on 27 Jan 2016 at
[2] “Bipartisan Budget Act of 2015 Closes Social Security Loophole”
Office of Legislation and Congressional Affairs. Social Security Administration. Dec 2015. Web. Accessed on 12 Feb 2016 at
[3] Brandon, Emily. “How the Budget Deal Changes Social Security” US News. 13 Nov 2015. Web. Accessed on 27 Jan 2016 at
[4] See note 2
[5] Halloran, Tom. “How to Navigate Social Security and Optimize Your Benefits” US News. 18 Jan 2016. Web. Accessed on 12 Feb 2016 at


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