Social Security is an essential lifeline for millions of Americans across the nation. Currently, nearly 78 million Americans benefit from the program, relying on it for financial stability during retirement, disability, or for surviving family members.
While many are familiar with the basics of Social Security, there are several lesser-known facts that beneficiaries should be aware of to fully maximize their benefits.
You can be eligible for spousal or divorce benefits
Retirement benefits are the most common form of Social Security, typically available after working and paying taxes for at least 10 years. However, if you’re married or divorced, you may also qualify for spousal or divorce benefits.
To receive spousal benefits, you must be married to someone who is entitled to either retirement or disability Social Security. The maximum spousal benefit is 50% of the amount your spouse is eligible for at their full retirement age (FRA).
For divorce benefits, you must not be currently married (though your ex-spouse can be), and the marriage must have lasted at least 10 years.
As with spousal benefits, your maximum payment is 50% of your ex-spouse’s benefit at their FRA. In both cases, even if you’re entitled to your own retirement benefits, you can receive additional benefits but you’ll only receive the higher of the two amounts.
For example, if your own benefit is $800 per month and your spouse’s benefit is $2,000 per month, your spousal benefit would be $1,000 per month. In this case, you would receive $1,000 per month, not a combined total of $1,800.
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You can reverse your claim decision
Once you start receiving Social Security benefits, the amount you get typically stays the same for life.
However, if you have second thoughts about your decision to claim, there are ways to reverse your decision. Surprisingly, about 70% of Americans are unaware of this option according to a survey by Nationwide, which can be crucial if you later regret when you started claiming.
You are allowed to withdraw your application within the first 12 months, but you’ll need to return all the benefits you’ve already received. After this period, you can reapply whenever you wish.
If you miss the 12-month period or cannot repay the benefits, there’s still a solution: suspending your benefits. Once you reach your FRA, you can pause your payments until age 70.
When you restart your benefits, the Social Security Administration will recalculate your payment, resulting in a higher monthly amount.
While not everyone will need to reverse their claims, it’s a useful option to be aware of. If you claim early and later regret it, you don’t have to be stuck with that decision forever.
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Your Social Security retirement benefits depend on how long you worked for
The amount you receive from Social Security depends on three key factors: your earnings, when you start claiming, and how long you’ve worked. While most people are aware of the first two, the length of your career is often overlooked, with more than 60% of U.S. adults unaware of its impact, according to Nationwide.
The Social Security Administration calculates your benefit based on the average of your highest-earning 35 years, adjusting the total for inflation. This amount is what you’ll receive when you file at your FRA.
If you haven’t worked for 35 years, any years without earnings will count as zeros, which will lower your benefit. Before you file for Social Security, it’s a good idea to ensure you have at least 35 years of income to avoid any unexpected reductions in your benefits.
Understanding how Social Security works and being aware of these lesser-known rules can help you make informed decisions and prepare for a more financially secure retirement.