File-and-suspend phaseout sparks scramble for optimization tools

The phase-out of Social Security’s file-and-suspend loophole has sparked a scramble among companies that offer benefit-optimization software to rewrite their programs and advisors to rethink client retirement plans.

The Bipartisan Budget Act signed into law by President Obama in November shuts down two Social Security claiming maneuvers that can boost benefits substantially for married couples — “file-and-suspend” and “restricted claims.”

File and suspend guide - adThe legislation will simplify Social Security planning. But the timeline for phasing out the maneuvers introduces some near-term complexity for those who are closer to retirement and can still benefit from the strategies.

Online optimization services built on the obtuse mathematics of file-and-suspend scrambled to update their tools after the new act was signed. T. Rowe Price took its optimization tool offline in November pending an update; AARP and Financial Engines both were working to update their software in November. Several already have updated their software, including Social Security Solutions, Maximize My Social Security and SS Analyze.

Learn more in my column this month at WealthManagement.com.

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