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3 Sneaky Social Security Rules That Can Make or Break Your Retirement

By Katie Brockman – Feb 19, 2020 at 8:15AM

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Not everyone is aware of these rules, but they can affect how much you receive in benefits each month.

Roughly half of baby boomers say Social Security benefits will be their primary source of income in retirement, according to a survey from American Advisors Group. However, the average Social Security benefit amounts to just over $1,500 per month -- or $18,000 per year.

If you're depending on your benefits to help you get through retirement, it's more important than ever to make sure you understand how the program works so you can maximize your checks and live as comfortably as possible. And there are a few sneaky rules that may trip you up and cost you big time in retirement.

Man with question marks above his head

Image source: Getty Images.

1. Be careful if you get remarried later in life

If you're divorced, you may be entitled to receive divorce benefits based on your ex-spouse's work record. You and your ex-spouse must have been married at least 10 years, you must be at least 62 years old, and you also cannot currently be married.

The last part is the kicker, because if you're currently receiving divorce benefits and decide to get remarried, you'll no longer be eligible to receive those checks.

This rule is especially important to those who either aren't eligible to receive Social Security benefits based on their own work record, or whose benefit amount is paltry compared to what they'd receive in divorce benefits. Some divorcees can potentially receive more than $1,000 per month in divorce benefits, so losing that money could be devastating in retirement.

You may be entitled to receive spousal benefits if you remarry, but if you marry someone younger who isn't qualified to start collecting Social Security yet, you aren't eligible for spousal benefits yet either. If your new spouse is earning considerably less than your ex-spouse, he or she may be also receiving much less in benefits -- which means your checks will be smaller as well. This isn't to say you shouldn't remarry later in life, but be sure you know how your marital status will affect your Social Security benefits.

One caveat to this rule, however, is if your ex-spouse passes away before you. As long as you were married for at least 10 years, you could be eligible for divorce survivors benefits. Even if you remarry later in life, as long as you're age 60 or older (or age 50 or older if you're disabled), your remarriage won't affect your ability to collect survivors benefits based on your ex's work record. So if you're putting off marriage because it will affect your divorce benefits, keep in mind that the rules change once your ex-spouse passes away.

2. Consider your spouse before waiting to claim benefits

The amount you receive each month in benefits largely depends on when you begin claiming. File for benefits at your full retirement age (FRA), and you'll receive the full benefit amount you're entitled to. You can also claim before or after your FRA, but your checks will be adjusted. If you claim as early as possible at age 62, your benefits will be reduced by up to 30% if you have a FRA of 67. However, if you delay benefits until after your FRA -- up to age 70 -- you'll receive a bonus on top of your full benefit amount each month.

Deciding when to claim benefits not only affects your own monthly checks, but if you're married, it can also affect how much your spouse receives. If your spouse is eligible to receive spousal benefits based on your work record, the maximum he or she can receive is 50% of the amount you're entitled to if you claim at your FRA. So if you claim earlier than your FRA, your spouse's benefit amount will also be reduced.

However, the rules are slightly different if you delay benefits past your FRA. If you choose to delay benefits, you'll receive bigger checks, but your spouse will not -- his or her benefit amount is still limited to half of what you'd receive at your FRA. So if you're delaying benefits in hopes that you and your spouse will both receive more money each month, you may be in for a surprise.

But wait -- there's more. One other caveat here is that if you pass away, your surviving spouse will receive 100% of your benefit amount as long as he or she has reached his or her FRA. So if you delayed benefits until age 70 and then later pass away, your spouse will receive more than if you had claimed at your FRA. So that's another factor to keep in mind as you're deciding when to claim.

3. You can undo your decision to claim benefits -- but it's tricky

In general, your decision to claim benefits is final once you've already filed. However, if you change your mind after you've begun claiming, you have one chance to reverse your decision. There are several requirements, though, and it's not always the right choice for everyone.

First, you only have 12 months to undo your decision after you've initially filed for benefits. Once that window has closed, you can no longer withdraw your application. You also only have one opportunity to change your mind in your lifetime, so use this chance wisely. Finally, if you do change your mind, you must repay all the benefits you've already received up to that point. This is the tough part for many people, because if you've waited several months or almost a year before reversing your decision, you'll likely need to pay back thousands of dollars.

There is one other option, though, if you've already started claiming and have decided you'd rather delay benefits: You can temporarily suspend your benefits. You're eligible to suspend your benefits if you've reached your FRA but are under age 70. By suspending your benefits, you'll stop receiving monthly checks until you choose to start claiming again, at which point your benefit amount will be adjusted to make up for the time you weren't receiving any benefits.

When you suspend your benefits, you'll receive bigger checks than if you'd simply continued collecting your prior benefit amount. However, your checks won't be as big as if you hadn't already started claiming benefits in the first place.

Social Security benefits can be complex and confusing, and there are plenty of tricky rules that can affect how much you receive each month. But the more you understand about how the program works, the better the decisions you can make and the more money you'll receive.

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