Despite its importance, Social Security is a difficult program to understand and navigate. It’s possible to be affected by a slew of different rules when it comes to your retirement income and the benefits you’re entitled to.
Sadly, if you don’t grasp the fundamentals, you run the risk of receiving less money than you’re entitled to by not claiming all of your benefits. There are three strange rules that often catch people off guard, and if you don’t want to face these negative outcomes that reduce your retirement income, make sure you know about them.
1. After a divorce, you may still be eligible for spousal or survivor benefits.
Millions of people rely on Social Security survivors and spousal benefits because they don’t qualify for their own benefits or because they can get more money by claiming benefits based on the work history of a higher-earning partner.
Sadly, far too many people believe that in order to benefit from these programs, you must currently be married. That’s not the case at all. The truth is that these benefits are available to anyone who has been married for at least ten years before filing for divorce.
Survivor benefits are only available if you haven’t remarried by the age of 60 or, in the case of a disabled person, by the age of 50. Spousal benefits are also affected by the fact that the spouse has not remarried at all.
Divorced people may not be informed by the Social Security Administration that they may be eligible for higher monthly benefits if they claim an ex-work spouse’s history. If you’ve had a divorce and want to maximize your retirement income, you need to be aware of these rules.
2. You can work an unlimited amount while getting benefits after full retirement age — but can be penalized for working beforehand
Another strange rule of Social Security pertains to benefits and employment. If you decide to work part-time while also collecting Social Security benefits, you may be disappointed to learn that your benefits may be reduced or halted entirely in some cases.
After reaching full retirement age (FRA), you can work as much as you want in your golden years without fear of losing any of your Social Security benefits. Between the ages of 66 and four months to 67, you’ll be eligible for full retirement.
If you’ve reached this point, don’t worry about how much money you’re making; you can still collect your retirement benefits (although it is possible you could find yourself being taxed on more of your benefits ).
If you’re under FRA, though, you’re at risk of forfeiting some of your Social Security funds temporarily. You’re doomed:
- If you earn more than $19,560 per year, or $1,630 per month if you don’t reach FRA, you’ll get $1 for every $2 earned above that amount.
- If you earn more than $51,960 a year, or $4,330 a month, you’ll be eligible for $1 of every $3 in additional income.
The Social Security Administration will no longer send you full checks to cover the amount you forfeited in benefits. Benefits are recalculated at full retirement age, and your monthly income rises a little.
It is no longer penalized for failing to receive a Social Security check in any given month because the Social Security Administration reimburses you for any penalties you were charged for filing an early claim.
This rule may come as a big shock if you were anticipating being able to get Social Security benefits while earning outside income to supplement them.
3. You can’t earn delayed retirement credits on spousal benefits
You may also be surprised to learn that while early filing penalties can reduce your spousal benefits, you do not have the opportunity to earn delayed retirement credits to increase the number of benefits you are eligible for.
There’s no point in waiting until you’ve reached full retirement age before filing for spousal benefits because you can’t get more than half of their standard benefit. To put it simply, you’d be wasting your time and money if you were to delay any longer.
As surprising as these three rules are, knowing them will ensure that you receive the full monthly Social Security benefit you’re entitled to.
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