What to Know About Changes to Social Security

As part of the Bipartisan Budget Act of 2015, the federal government signed into law some changes to the framework of Social Security that are important to understand. While the basics of the program aren't changing all that much, some key rules are being updated. These changes are good to know, whether you're retired or an employee paying into Social Security.

Delayed benefits changes

Those who qualify for retirement benefits under Social Security used to be able to delay those benefits in exchange for a larger annual distribution. According to Yahoo Finance, that benefit would grow by 8 percent per year  until the beneficiary reached age 70. Some married couples used this rule to get even higher benefits, which some have called a loophole. With new changes to the Social Security program, effective May 1, these methods are no longer applicable.

"Changes to Social Security may affect some of its highest earners."

One common method was the "file and suspend" strategy. This allowed a couple to delay one of their benefits while the other spouse collected. All they would have to do is file for benefits at different times, with the earlier-filing spouse suspending their benefit, allowing it to continue growing at 8 percent. With the new rules, this method is no longer an option. Once one spouse has suspended their benefit, the other won't receive spousal benefits  either, according to the Social Security Administration.

In another method, called "restricted applications," one member of a married couple receiving spousal benefits would delay his or her own benefit. This would allow both spouses to see an 8 percent growth in one benefit while still receiving another each month. This is no longer an option for anyone who is 62 years old as of January 1, 2016.

With these new rules, the basic idea is that applying for an individual or spousal benefit is one in the same. The SSA has decided that in this instance, you will only receive the larger of the two benefits, rather than both. According to ThinkAdvisor, some married couples could see up to several thousand dollars gone  from their benefits per month, under the new changes.

The future of Social Security

These changes to Social Security come at a time of vigorous debate on how to save the program , which is projected to run out of funds by 2037, at least at the current rate, according to The Washington Post. Still, retirement benefits aren't going away entirely. These changes will reduce benefits for some, but in practice, will only target the highest earners from the program who some say are abusing the system.

While these changes are now in effect, most of the basic rules of Social Security remain intact. Spousal benefits are still available, and distributions still grow each year as withdrawals are delayed. The key takeaway is that it's still possible, and highly recommended, that retirees time their benefits to get the most out of them.

According to The Motley Fool, one typical delayed benefit strategy  is still useful under the new rules. Assuming they would like to see their benefit grow but can't wait until age 70 to get the maximum, a married couple can prioritize benefits. The higher wage earner should hold off on distributions while the other spouse applies for his or hers. In this case, the couple gets at least some money immediately, while the rest of their benefit continues to grow.

Workers, retirees and savings fanatics can learn more about how to get the most out of their money by talking with a banker at their local Vectra Bank.