Mary Beth Franklin: Budget raises questions about fate of claiming strategies

Think of it as an asterisk in President Barack Obama’s $3.9 trillion budget. One sentence on Page 150 of the president’s newly released 2015 budget proposal calls for “eliminating aggressive Social Security-claiming strategies.”
My intrepid InvestmentNews colleague Darla Mercado ferreted out the potentially significant statement this week. I called the Social Security Administration immediately to ask about its meaning. My SSA contacts promise to get back to me. I’ll let you know when they do.
The sentence, in its entirety, says: “In addition, the budget proposes to eliminate aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits. “
That’s it. No explanation.
(Mary Beth’s advice: Don’t get greedy with Social Security strategies)
My question is which strategies would be eliminated and how would it be accomplished?
Would it mean an end to the file-and-suspend strategy that allows a beneficiary who is full retirement age or older to claim Social Security and immediately suspend those benefits? Would it eliminate the ability for a spouse to restrict his or her claim to spousal benefits only while his or her own retirement benefits continue to accrue delayed retirement credits up to 70?
The file-and-suspend strategy, which allows the beneficiary’s eligible spouse or dependent minor children to collect benefits while their own retirement benefits continue to grow, was authorized by the Senior Citizens’ Freedom to Work Act of 2000.
I suspect a congressionally authorized provision would require an act of Congress to change it. If so, financial advisers can rest easy knowing that, like tax reform, there’s a big difference and a long time lag between proposals and final action.
On the other hand, if this proposed change could be accomplished administratively at the agency level, it could happen relatively quickly.
Back in December 2010, SSA announced a rule change that limited the time period for beneficiaries to withdraw an application for retirement benefit to within 12 months of first claiming and decreed that the option could only be exercised once. Prior to the rule change, which went into effect immediately upon announcement, there was no time limit on when people could exercise the so-called “do-over” strategy or how many times they could do it.
William Meyer, co-founder of Social Security Solutions, a software company that provides programs that calculate appropriate claiming strategies for consumers and financial advisers, doesn’t see any cause for alarm.
“The last two material changes to Social Security were in 1977 and 1983, and it took seven and 17 years, respectfully, from the time the change was announced to the time the government implemented it,” Mr. Meyer wrote in an e-mail.
As a Capitol Hill reporter for United Press International, I covered the Social Security reform commission chaired by Alan Greenspan in 1983. The decisions they made to stabilize the finances of the Social Security system were significant, including taxing some Social Security benefits for the first time, but the American public had more than a decade to get used to the changes before they went into effect.
Mr. Meyer acknowledged that the Social Security system is in need of further changes to secure its future finances, but predicts they won’t happen quickly.
Plus, he said, there is no such thing as a simple change to such a complex system. “Changes are very hard to implement because there are so many rules and many of them are interdependent on one other,” he added.