2016 Update on Social Security

Social Security and

Retirement Benefits

SSI-Cards-benefitsThe U.S. Government, Internal Revenue Service, and Social Security Administration specifically have implemented major changes for 2016. This is the largest change in years and may significantly affect the way boomers and older seniors receive their benefits.

In recent years, the federal government has approved small increases to Social Security benefits to help beneficiaries with rising prices on food, rent and other essential items. Now, anyone of retirement age will receive NO Increase of Benefits for Inflation.

Remember, this not only affects you, but what about our older aging seniors who are already struggling living near or at the poverty level, living alone, and or have no family to help with living expenses!

Boomers take note, it is important to manage your investments carefully in order to generate sufficient income for today’s expenses including long-term where any growth can be laid out to increase your monthly income to help keep up with inflation.

Social Security “File & Suspend” Strategy Eliminated – Through 2015, Individuals could file for Social Security Benefits but suspend receiving them by not receiving the money until a later age. The purpose was to lock in benefits in case the government decided to reduce or eliminate Social Security down the road.

Any person who “Filed & Suspended” benefits would be exempt from any Social Security changes in the future. This strategy only worked for those who could afford to wait for the benefits at an older age. Filing and Suspending will stop being available to those 66 years of age or older through April 29, 2016. Those under 66 will NO longer have the option.

The Restricted Application Rule - A married individual can no longer file an application at age 66 to receive Social Security benefits on a spouse’s wage based in order to build up credits on his or her own benefits. However, those who are 62 years of age as of Dec. 31, 2015 may still be eligible. (There are “No” Social Security Retirement Benefits Available prior to 62 years of age.)

No Healthcare?  It Will Cost You More –  The Obamacare legislation requires that every adult have healthcare. If an individual does not sign up for healthcare through his/her employer, or through a private arrangement with an insurance company or through Obamacare, the individual is subject to IRS penalties.

In 2016, the IRS penalty will increase to $695 or 2.5 percent on income this year. The penalty was $95 or 1 percent of income in 2014. “The penalty rates were mapped out at the time the law was signed and was set to continue to increase each year. The only way to avoid this penalty is to obtain medical coverage.

The past few years many uninsured people decided it was cheaper to simply pay the penalty. The government ‘s intention to increase the penalty will over time become less attractive to drive the uninsured to purchase coverage.

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