New Social Security Laws Affect Couples and Ex-Spouses

New Social Security Laws Started in 2016

A married couple discusses their social security payments.
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The most recent changes to Social Security Administration (SSA) law came about from The Bipartisan Budget Act of 2015. This act made changes to the SSA system that affects married couples and the amount of payments a person can receive based on an ex-spouse. For the most part, these changes were minor.

Major changes to the SSA system were made by way of the Social Security Reform Act of 2016. These changes altered the way SSA benefits and the inflation adjustment are calculated. As a result, some high-income retirees started seeing smaller SSA checks.

Learn more about the changes that came about from the Bipartisan Budget Act of 2015, and see the proposed changes introduced with the Social Security Reform Act of 2016.

Bipartisan Budget Act of 2015 Social Security Changes

The new 2015 Social Security laws did away with the "claim now, claim more later," and "spousal switching" type of strategies. As a result, the worst-case scenario for a couple is that they will no longer get the four years of spousal SSA payments that they thought they would receive. For some couples that have more than one income, this means they'll receive fewer benefits during the four years from ages 66-70.

The exact rules that changed had to do with people being able to file a restricted application and volunteering to suspend payments.

Restricted Application Option for Couples Phasing Out

Some married couples planning on having one spouse file a restricted application at their full retirement age so that they could claim a spousal benefit (thus letting their own benefit to keep growing to be claimed when they reach age 70) will find that this can no longer be done. People born Jan. 2, 1954, or later can't take that option.

This means if you turned 62 on or before Jan. 1, 2016, you can still file a restricted application. Still, you will still need to wait until your full retirement age of 66 to file it.

It's not the same if you turn 62 on or after Jan. 2, 2016. In this case, when you file for SSA payments, you will be filing for all benefits available. This is called deemed filing, and you will get the larger of your own payment or a spousal payment as a result. Your spouse must have filed for their own benefit for you to be eligible for a spousal benefit. If you file first, you will get your own payment. Then later when your spouse files, if the spousal payment will be more than your own, your payment amount will increase.

Getting rid of the restricted application can and will affect a divorced spouse (if the couple was married for at least 10 years) who was planning to restrict his/her application to claim a divorced spouse's payment for a few years and then later switch over to claiming their own.

The restricted application is still allowed for widows or widowers. This means a widow can restrict her application to only a widow benefit. This plan allows her own payment to accrue delayed retirement credits. She could then switch to her own payment at age 70 if it would be larger than her widow payments.

Voluntary Suspension Now Means Related Benefits Also Will Be Suspended

The Bipartisan Budget Act of 2015 also changed the rules around the voluntary suspension of payments. For couples, it often made sense for the higher earner to suspend payments when they reached full retirement age. This would allow their spouse to collect a spousal benefit. Then, upon reaching age 70, the higher earner would be able to claim their age 70 payment amount.

What happens with the new rules is that if you suspend your payments, all payments based on your record (except for the benefits for an ex-spouse) will also be suspended. If you suspend, your spouse cannot claim a spousal benefit, as that payment would also be suspended. These new rules began 180 days from the date that the law takes effect. The last day to file a voluntary suspension under the old rules was April 29, 2016.

If you have already voluntarily suspended and have a spouse claiming a spousal benefit, or if you did so before April 29, 2016, you will be fine under the old rules.

Social Security Reform Act of 2016

Below is a simple look at the most recent proposed changes.

  • For those born in 1960 and after, it would increase the full retirement age from 67 to 69.
  • For high-income retirees, the cost of living adjustment (COLA) would not be applied, while low-income retirees may see a large COLA.
  • Starting in 2045, taxing SSA payments would be phased out.
  • The earnings test would be done away with. This would provide people with a good reason to keep working in early retirement while getting SSA payments.
  • A change to the way payments are determined would be made so that workers who earn a low income would see an increase in payments.

There is no telling what form any final changes may take, or when such a bill might pass. It is likely that major changes would be phased in, as it takes time to make the changes to the payment calculations.

The average person who is near retirement or getting SSA payments would not see a major impact should these proposed changes go into effect.