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Again though, those who will turn 62 by the end of the year will be grandfathered in under the old rules for restricted applications, so if this is you or someone you know, make sure they take advantage of this if it applies to them.

Tom: And the third rule change?

Mellody: It is another filing change that you have to know about, though it generally affects fewer people, and it deals with suspended benefits. Currently, if you were to file for Social Security at age 66 and then suspended your payments, your benefits would grow at a rate of 8 percent per year. However, if suddenly you had a financial emergency or an illness at 68, you could retroactively un-suspend your benefits. In doing this, you would lose the 16 percent increase you would have received from deferring payments, but Social Security would send a lump sum payment for the past two years, and future monthly payments would be made at the rate you would have received at 66.

Under the new rules, Social Security beneficiaries can no longer retroactively un-suspend benefits and get a lump sum. Instead, in the example above, if you needed to start receiving benefits at age 68, you could still un-suspend your filing, but you would just begin to receive his monthly payments at a higher rate, thanks to the deferral.

Tom: These are significant changes that could really impact people. Why did Congress make these changes, and what should we do to adjust?

Mellody: These changes are certainly going to have a significant impact on many people who were counting on these strategies for their retirement, especially because the changes are taking effect so rapidly. In terms of why they were made, most people believe they are geared toward saving money and closing perceived loopholes in the Social Security program.

As for what to do to adjust to these changes, the best thing you can do is put more money into your 401(k) in order to build up your own retirement funds outside of the Social Security system. You also should know that your benefits will be calculated based on your past earnings, so asking for a pay raise or moving to a higher-paying job will also help. One of the most important pieces of any puzzle is awareness, so I hope sharing these changes with our audience today ensures that more people know these changes are coming and are prepared.

Tom: Absolutely. Thanks for keeping us informed, Mellody!

Mellody: Happy to help, Tom!

 Mellody is president of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News and CBS.com.

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Money Mondays: What You Need To Know About Social Security Changes  was originally published on blackamericaweb.com

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