As a result of the Bipartisn Budget Act of 2015, the oft-used strategy that allows one member of a married couple to file for Social Security, then turn around and suspend his or her benefit, is going by the wayside.
Couples have been taking advantage of this loophole since Congress passed the Senior Citizens Freedom to Work Act in 2000. The act introduced a new concept called “voluntary suspension” of benefits, allowing those who had already started receiving Social Security benefits to stop their payments and earn delayed retirement credits.
The rationale for doing so was that it allowed your spouse, or in some cases other family members, to draw a benefit based upon your earnings record. In the meantime, your own benefit would be growing by as much as 8 percent per year until you reach age 70.
So if you were considering filing for Social Security benefits this year and then suspending them, acting sooner rather than later is the way to go.
The other reason to file early rather than late is that there's an economic tradeoff in waiting too long. The Social Security Administration pays a given month's benefits the following month after you file for them. And each month you wait reduces your benefits by 0.42 percent.
So for example, let's say you turned 62 this past January. That's the earliest age you're allowed to file for your Social Security benefits, but you're planning to wait until December 2016 to file for your benefit.
Well, you've just lost 11 potential payments. And your benefit is reduced by 4.62 percent (11 multiplied by 0.42 percent).
So you've got a lot to think about.