Congressional budget deal provision could affect current and future retirees.
The week, the House worked out a budget and it was passed through the Senate at 3 o'clock this morning. President Obama is also expected to sign it into law. It will remove discussion about a government shutdown for a while. Good news right? Well, not so much in terms of Social Security and the claiming strategies that financial planners and retirees were working into their financial plans.
The proposed changes to Social Security are meant to fix some of the "loopholes" in order to prevent individuals from collecting larger benefits than Congress intended. Changes will impact a strategy known as file and suspend. Under the new budget agreement, retirees will only be able to collect spousal benefits if their spouse is currently collecting (not suspending) their own benefit; thus eliminating the file & suspend option all together. These changes are meant to prevent higher income retirees from taking advantage of the system, but they could have widespread effects on lower-income recipients and spouses who may have their benefits cut.