Social Security serves as a vital financial foundation for millions of Americans. With nearly 78 million individuals benefiting from it, this program is crucial for retirees, disabled workers, and families of deceased earners. While many are familiar with the basics, knowing some lesser-known facts can help you maximize your benefits. Let’s look into these important insights.
Spousal Benefits
Did you know you could claim benefits based on your spouse’s work record? If your spouse is eligible for Social Security, you can receive spousal benefits even if you’ve never worked. These benefits can amount to 50% of your spouse’s payout at their full retirement age (FRA).
For example, if your spouse’s benefit at FRA is $2,000, your spousal benefit could be $1,000. However, you won’t receive a combined total of your retirement benefit and the spousal benefit. Instead, you’ll get the higher of the two amounts.
What about divorce? If your marriage lasted 10 years and you’re not remarried, you can claim divorce benefits. These benefits are calculated similarly to spousal benefits, providing financial support even after a separation.
Reversing Claims
Claiming Social Security benefits is a major decision—but what if you change your mind? Surprisingly, Social Security offers a way to undo your claim. Within 12 months of starting benefits, you can withdraw your application and repay the benefits you’ve received.
Missed that window? No problem. Once you reach FRA, you can suspend your benefits and restart them later, up to age 70. This option increases your monthly payments, giving you more financial flexibility.
For instance, if you started claiming benefits at 62 but later decided to wait, suspending your payments can help recoup some of the missed growth.
Work History
Your work history plays a significant role in determining your Social Security benefits. The Social Security Administration calculates your payout based on your 35 highest-earning years. If you haven’t worked for 35 years, zeros will be factored into the calculation, reducing your monthly benefit.
Consider this: if you worked for only 30 years, the system will average your earnings over 35 years, with five years counted as zero. This could significantly lower your payout.
The solution? Try to work at least 35 years to ensure your benefit reflects your full earning potential.
Plan Wisely
Maximizing your Social Security benefits isn’t just about when you file—it’s about knowing your options. From spousal and divorce benefits to reversing claims and leveraging your work history, each choice can shape your financial future.
Take time to learn the rules, evaluate your situation, and make informed decisions. A little planning now can lead to greater peace of mind in retirement.
FAQs
Can I claim Social Security from my ex-spouse?
Yes, if your marriage lasted 10 years and you’re not remarried.
What is the maximum spousal benefit?
It is 50% of your spouse’s benefit at their full retirement age.
Can I reverse my Social Security claim?
Yes, within 12 months, or suspend after full retirement age.
How does work history affect Social Security?
Benefits are based on your 35 highest-earning years.
Can I combine my retirement and spousal benefits?
No, you’ll receive the higher of the two amounts.
