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Filing for Social Security Isn’t Always an Individual Process

April 16, 2020 Emily Hoffman By Emily Hoffman

Do you have clients that are married? If you answered yes, you need to help them coordinate their Social Security strategies in order to maximize their combined benefits. Couples who file in a coordinated fashion get more Social Security income than when they file individually.

One element every advisor can add to their offerings is Social Security advice. Setting clients up to maximize their Social Security benefits in combination with the income they’ll receive from their other investments puts them in a more comfortable financial position during retirement.

To establish coordinated strategies, advisors need to work through the variables that play into a couple receiving the maximum benefit. One key variable is the birth date for both individuals, not just the older claimant. Finally, the implications of the Bipartisan Budget Act of 2015 also affect couples’ benefits outcomes.

The Bipartisan Budget Act of 2015 added two new rules to Social Security claims:

  • As of April 30th, 2016, it is no longer possible to claim spousal benefits on an account for which benefits have been suspended. This eliminates a potential strategy for a married couple involving a worker filing for retirement benefits and then immediately suspending those benefit payments so that their own benefits continue to grow while their spouse claims spousal benefits (often referred to as the “file and suspend” strategy).
  • For claimants who attained age 62 in January 2016 or later, the option to file a restricted application for spousal benefits only at Full Retirement Age (FRA) or later is removed. If a person files for benefits at or after FRA when eligible for both their own benefit and a benefit from their spouse (referred to as “dual entitlement”), they will be treated as though they had filed for both benefits and receive a payment totaling the higher of the two amounts, as is already the case for a dually-entitled person filing earlier than FRA. 

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LifeYield provides an easy-to-use tool that helps advisors navigate through all of these variables and model scenarios for couples as they plan their retirement. Using the LifeYield Social Security Advantage tool, they can explore multiple life scenarios for both people to determine the ideal strategies for filing. It takes the Bipartisan Budget Act changes into account and applies the rules wherever appropriate to ensure the optimal strategy leads to the highest possible lifetime benefit. With the Social Security Advantage, advisors can provide each member of the couple with their recommended filing age based on the other person’s recommended age and eliminate guesswork for their clients.

The LifeYield Social Security Advantage® tool is available to both advisors and plan sponsors in order to help their clients enjoy their personal LifeYield tax-smart retirement income throughout their retirements.

Emily is the Director of Product Management at LifeYield. She's our product expert and frequently writes about how our new product features and enhancements help our customers.