As of November 2nd 2015, President Obama signed, and thereby enacted into law, the Bipartisan Budget Act (BBA) of 2015. Subtitle C, Section 831 of this bill includes significant changes to social security benefits.  These changes include the phase out of filing strategies referred to as “unintended loopholes” created previously by Congress back in 2000.

Who Do The New Rules Apply To?

Regardless of when you plan to retire, these changes can affect the retirement plan you’ve developed for yourself and your family, as the act prohibits the use of strategies traditionally utilized to maximize benefits. If you did not turn 62 by the end of 2015, these Social Security changes will affect you. Here are the two main changes coming down the pipeline:

1. Restrictions on spousal benefits. Before the BBA, if a beneficiary reached full retirement age, they were able to restrict their application to spousal benefits only so that their retirement benefits could continue to accrue.

However, under the new law, this will no longer be an option. Your spouse cannot collect their benefits unless you collect yours at the same time. No matter what age you are when you apply for benefits, you will have to take the highest benefit you’re eligible for, whether it’s a retirement or spousal benefit.

2. Collecting a retroactive lump sum is no longer an option. Before the BBA, you could suspend your benefits and reverse that decision later to claim a retroactive lump sum that dated back to the day you filed your application. Under the BBA, once you reach your full retirement age, the option to collect a retroactive lump sum is no longer available.

Who Will NOT Be Impacted By The BBA? 

The following people will not be impacted by these new regulations:

• Anyone age 70 and over currently receiving Social Security benefits will not be affected by the changes from the BBA.
• Anyone between the ages of 66 and 69 who suspends their benefits by April 30, 2016 will be “grandfathered in” and can still utilize the retroactive lump sum option.
• Anyone between the ages of 66 and 69 can suspend their benefits by April 30, 2016 to allow them to grow. At the same time, their spouse can file a restricted application at full retirement age.
• Anyone who turned 62 by December 31, 2015 will still have the option to file a restricted application when they reach full retirement age (66) as long as either their spouse has filed and suspended their benefit prior to April 30, 2016 or their spouses are already receiving their lifetime benefit.

Additional Frequently Asked Questions

• Were you planning to file and suspend your benefits for a future retroactive lump sum?
• Did you want to suspend your benefit and let it grow so that your spouse can file a restricted application?
• Does spousal or retirement provide the highest benefit?

The answer to all of these questions is if you thought you’d be able to choose, the BBA has changed that law so that now you will receive the highest amount, regardless of which benefit it is.

Bottom Line

There are numerous questions surrounding the Bipartisan Budget Act and how it may impact your Social Security options.  If you are worried about how the new laws are going to affect you, please be sure to speak to a qualified financial advisor that can assist you. For additional information, download this free e-book, “Last Chance: Social Security’s Big Change.”

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For valuable financial tools and information on how to set yourself up for a happy retirement, check these out:

Social Security Optimizer, Retirement Calculator, 401k Allocator, Money & Happiness Quiz, Is It Time For An Economic Shutdown? and You Can Retire Sooner Than You Think

Disclosure:  This information is provided to you as a resource for informational purposes only.  It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors.  Past performance is not indicative of future results.  Investing involves risk including the possible loss of principal.  This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

Just announced: President Obama is extending overtime pay to millions more Americans

Every week, millions of Americans work more than 40 hours but do not receive the overtime pay they have earned.

President Obama is taking action to fix that: In a note to signers of a We the People petition, the President announced that tomorrow the Department of Labor will finalize a rule to extend overtime protections to 4.2 million more Americans.

Check out the President’s note:

I wanted you to be the first to know about some important news on an issue I know you care deeply about: making sure you’re paid fairly.

Tomorrow, we’re strengthening our overtime pay rules to make sure millions of Americans’ hard work is rewarded.

If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones. It’s one of most important steps we’re taking to help grow middle-class wages and put $12 billion more dollars in the pockets of hardworking Americans over the next 10 years.

For generations, overtime protections have meant that an honest day’s work should get a fair day’s pay, and that’s helped American workers climb the ladder of success. That’s what middle-class economics are all about.

But after years of inflation and lobbyists’ efforts to weaken overtime protections, that security has eroded for too many families.

One of the many Americans who has been working hard but struggling to keep up is a single mom from Tucson, Arizona, Elizabeth Paredes. As an assistant manager at a sandwich shop, Elizabeth sometimes worked as many as 70 hours a week, without a dime of overtime pay. So Elizabeth wrote to me to say how hard it is to build a bright future for her son.

And she’s not alone: Today just 7 percent of workers qualify for overtime pay based on their salaries. Compare that with 1975, when more than 60 percent of workers qualified for overtime pay based on their salaries.

This policy just hasn’t kept up with the times.

The fundamental principle behind overtime pay comes from a Depression-era law called the Fair Labor Standards Act, which helps ensure that workers who put in more than 40 hours per week should generally get paid more for that extra time. I directed Secretary of Labor Tom Perez and the Department of Labor to update and modernize the overtime rules and uphold that principle.

After more than a year of listening to workers, employers, and concerned citizens like you, the Department of Labor will issue a new rule tomorrow to make it clearer to workers and businesses which workers qualify for overtime pay.

It doubles the salary threshold and automatically updates it every three years. The rule takes effect December 1.

This is a step in the right direction to strengthen and secure the middle class by raising Americans’ wages. When workers have more income, they spend it — often at businesses in their local community — and that helps grow the economy for everyone.

Americans have spent too long working long hours and getting less in return. So wherever and whenever I can make sure that our economy rewards hard work and responsibility, that’s what I’m going to do. Every hardworking American deserves a paycheck that lets them support their families, gain a little economic security, and pass down some opportunity to their kids. That’s always worth fighting for.

Thanks for raising your voice on this critical issue — we couldn’t have done it without you.

President Barack Obama

Learn more about the update to overtime pay.