What is The Deemed Filing Rule And How Can It Impact Your Social Security Benefits

Troy Sharpe: The Social Security decisions you make can oftentimes put more money in your pocket or could take money out of your pocket. That’s what we have with the deemed filing rule.

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Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, Certified Financial Planner professional, and host of The Retirement Income Show.  When we look at when to take Social Security benefits, you have to be very careful of this deemed filing rule if you were born on or after January 2nd,  1954. The rules changed some time ago, and this applies to you if you’re born on or after that date.

It used to be that you could file  a restricted application, get some percentage of your spouse’s Social Security benefit prior to your full retirement age, but if you were born on or after January 2nd,  1954, that no longer is the case. In this example, we have Joe who’s 67, Mary who is 63. Joe takes his full retirement age benefit  at 67 of $2,500 per month. Mary wants to wait to defer hers, but Mary was talking to a friend at church, maybe someone in her neighborhood that’s a little bit older  and they told her, I’m taking half of my husband’s Social Security benefit without my benefit being impacted at all.

Mary says, you know what? I want to do that too.  I want to get half of my husband’s Social Security benefit without mine being impacted. Well, what Mary is unaware of is that her friend was born before January  2nd, 1954. This is a very important date with the recent changes in Social Security. Mary was born after January 2nd, 1954.  so the restricted application is no longer an available option as a planning technique for Social Security that’s available to her. It was for her friend,  but not for Mary.

If Mary tries to file a restricted application or a spousal benefit, the Social Security Administration will deem her to have  filed for any and all benefits available to her. This means that she will get her personal benefit early, it will be permanently reduced,  and if she is eligible for a small spousal benefit, it could go on top of personal benefit. In this particular instance, I believe that’s unlikely. Mary will have  permanently reduced her benefit because she is not eligible to file for a restricted application on the spouse’s because she was born on or after January 2nd, 1954.

Very, very important date there. If you’re born before it, you are eligible for a restricted application to get half of your spouse’s without impacting your Social Security benefit.  If you’re born on or after it, then you are no longer eligible for the restricted application. If you file, you will have been deemed to have filed for any and all  available benefits to you. Make sure you don’t make this mistake.

If you’re not sure what to do with Social Security, if you’re not sure how any of this impacts you, reach out to our office  here at Oak Harvest Financial Group, we will provide the Social Security analysis but we’ll also provide that income analysis and tax analysis because like dominoes, every single decision you make in retirement  affects every other decision.

Social Security, it’s an extremely important retirement income decision, but it can’t be made in a vacuum. It needs to be made with respect to  everything else that you have going on in your plan. If you have questions about this, make sure to reach out to us and we’ll help walk you through the analysis and help you understand what your choices are. The subscribe button, hit the like button,  and share this video with a friend or family member if they’re around Social Security age.