All posts by Dinesh Sharma, CFP®


New Social Security Rules Law Took Effect on November 2, 2015

In a bitterly divided Congress and the continuous bickering that’s been going on between the Republican controlled Congress and the Obama Administration, the lightening speed of this legislation becoming the law came as a shocking surprise to most people. In any case, new Social Security rules are the law now. In general, the law impacts spousal and dependent benefits. At a high level, the idea is that a spouse or other dependents should get Social Security benefits on a worker’s record only when the worker himself is taking benefits. But like all government rules, the devil is in details. Here are some salient features of this law. Pay close attention to the dates:

File & Suspend Provision

A person can still file and suspend ( and allow his eligible spouse take spousal benefits on his record while waiting his own benefits to grow) if he has attained full retirement age on or before 05/01/2016. What’s the logic behind this date? For one, it’s 6 months from the date this legislation was signed into law by the President. For others, go figure. Keep in mind that the full retirement age is based on a person’s date of birth. For those who made it to this date, I say congratulations for winning the lottery. And for those of us who are younger by  a day or more, I would say tough luck my friends.

Restricted Option

The restricted option (whereby the spouse of a person taking benefits can opt for only spousal benefits while waiting for own benefits to grow) also went through changes. According to new rules if you’re 62 or over as of 12/31/2015, the restricted option is available to you. What’s the logic behind this date? Make up one of your own. I guess some of those who will miss out on file and suspend can possible go for restricted option.

Ex-spouse Benefits
Under certain conditions an individual could claim half of the Social Security benefit on an ex-spouse’s record while letting his own benefits grow till age 70. Similar to restricted option, one can benefit from this approach if he/she is 62 or over as of 12/31/2015.

Dependent Children Benefits
As you may know, subject to family benefits limit, each eligible dependent of a Social Security recipient is eligible for half the benefits of a parent (higher of the two if both parents are eligible). Going forward dependent benefits will only be available when parent is collecting except if the parent filed and suspended on or before 05/01/2016. This is probably the most important date in my view.

Rules That Didn’t Change

  • No change to survivor benefit rules. Thank god.
  • No change to delayed retirement credit. The supposedly risk free 8% annual increase to delayed benefits is still available. Coupled with the compounding effect of COLA (Cost of Living Adjustment), it’s a very important option for people who’re likely to live longer.


Social Security Maximizer™ & New Rules

Obviously, this impacted the Social Security Maximizer™. We worked feverishly (including over the weekend, thank you GoWealthPro team) to implement all the changes that are part of this law. The challenge was to make sure the old rules work for those who are still eligible while new rules should apply to the rest. In any case, we’re happy to inform you that we’ve upgraded the software with new rules. Yippy…..

I hope you find this update helpful.


Significant Changes to Social Security Rules on the Deck

This week’s bipartisan budget deal that was agreed between Congress and the White House will significantly impact Social Security benefits. In particular, it affects spousal and dependent benefits related strategies, namely ‘File and Suspend‘ and ‘Restricted Option‘. A quick note on these strategies: In case of a file and suspend, one spouse files for benefits and immediately suspends until a future date up to age 70 allowing the other spouse (if eligible) to start claiming spousal benefits. This allows the first spouse to increase benefits via delayed credit while the second spouse collects spousal benefits and also gets to take delayed credit to her own benefits should she switch over to her own benefits later (if higher). Under a ‘restricted option’ (aka restricted application), one spouse is already collecting benefits on his/her own record and the second spouse (if eligible) can restrict benefits to just spousal benefits and can later take higher benefits (with delayed credit) based on personal record.
While the details are still emerging from the deal and it is not the law at this time, here’s what you need to know:

  • File and Suspend provision may completely go away in near future. Those who are already benefiting from file and suspend strategy could potentially be grandfathered-in. Although there was a mention of cracking down it. In that case, such recipients may see their benefits reduced next spring through a crackdown provision. That means if spousal and dependent benefits are being claimed as a result of someone filing and suspending, those benefits will stop unless the person filing and suspending starts taking benefits.
  • The Restricted Option will not be available to those who will be turning 62 in 2016 or later.
  • It is not affecting standard delayed credit i.e. getting 8% increase in benefits for each year in delayed benefits until age 70.
  • We’re studying the effect of this change to ex-spousal and survivor benefits to an individual who is also eligible for Social Security benefits on his/her own record.
  • If it becomes the law either in its current or revised form, we will quickly update the Social Security Maximizer™ software.
  • Even if File and Suspend and Restricted Option strategies are eliminated, you still need to do Social Security planning and take advantage of other benefits maximization approaches.

Volatile market, jittery clients, what to do?

U.S. Equities market has been very volatile lately. The S&P 500, a barometer for the large cap market hit an intraday low of 1,823 yesterday, down from a high of 2,011 on September 18. This represents a sharp drop of over 9% in less than a month. Obviously, this makes many clients jittery. Being a financial advisor isn’t easy during such times. Although most clients know that markets can fluctuate significantly, yet during such times many of them look to their advisors for comfort. Here are a few ways to not only calm existing clients but to also get new clients.

First, let’s discuss some true and tried approaches. Historical behavior of equity markets is a good start. Explain the historical trends behind market volatility and long-term benefits of staying invested during such timings. Imagine how a client would have fared if he decided to pull-out of equity markets in March of 2009 when S&P 500 had gone below 700. If he had stayed away from equity markets he would have missed an epic bull market.

This is also an opportunity to reallocate client portfolios. If you are a money manager, you could help clients to get additional return by simply moving some money from cash to an equity portfolio. Buy low, sell high is the holy grail of investment that’s seldom practiced. However, with a bit of disciplined approach you can help clients follow it.

Macroeconomic factors are also important to consider. The U.S. economy is in fairly good health. We have a low inflation rate, historically low interest rates, lower oil prices, and economy is still generating a good number of jobs. For the month of September, the U.S. economy added 248,000 non-farm payroll jobs. The unemployment rate has gone down to 5.9%. This was the first time it ticked below 6% since the financial crisis of 2008 plunged the economy into recession. Agreed, unemployment rate is a lagging indicator. But given that we don’t have a major economic crisis, these fundamentals aren’t going to change overnight. Consider drawing your clients’ attention to this big picture.

Financial advisors can also use other ways to better engage clients. For clients approaching retirement, Social Security planning is an important element of their retirement picture. Consider creating Social Security plans with maximized benefits. For other clients, reviewing financial goals and ensuring that the investment plan is aligned with long-term goals and objectives would be useful.

A problem is also an opportunity. If you’re interested in growing your book of business, this may be a good time to reach out to prospective clients. Perhaps prospective clients are more worried than your existing clients. You can offer them a complimentary financial checkup and educate them on market cycles. If you’re interested in growing your client base in 55+ market, Social Security and healthcare expenses are hot topics. Consider running an educational event on these topics.

The current turmoil in market is not going to stay forever. Make a good use of this opportunity. Hopefully, you will find these tips useful to help your clients and to help yourself.

Dinesh Sharma, CFP®
Resources available from GoWealthPro Corp.

1. FREE Social Security Maximizer™ for advanced Social Security Planning.


2. Personal Financial Index® for a quick financial health checkup and holistic financial health score.


Use promo code WP201410 to claim a limited time 20% discount on Wealth Planner™ for intuitive and efficient financial planning.


Use promo code REHP201410 to claim a limited time 20% discount on Retiree Healthcare Planner™ for personalized and location based healthcare expense planning during retirement.


Use promo code ERP201410 to claim a limited time 20% discount on Retiree Healthcare Planner™ for custom retirement plans for plan participants and income replacement scorecard for plan sponsors.