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3 Social Security Secrets That Could Leave You Richer in Retirement

By Maurie Backman - Apr 13, 2021 at 5:18AM

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These lesser-known facts about Social Security could snag you higher benefits and the perks that go with them.

You'll probably end up relying on Social Security to help pay your bills in retirement. You may even need those benefits to provide the bulk of your senior income. As such, it's important to read up on how Social Security works, and here are a few pieces of inside information that could really help you score a higher benefit check later on.

1. You can undo your filing and claim benefits again later

You're entitled to your full monthly benefit, based on your wage history, once you reach full retirement age, which kicks in at 66, 67, or somewhere in between, depending on the year you were born. But the Social Security Administration (SSA) will allow you to start collecting benefits as early as age 62, albeit at a reduced rate for life.

Some people wind up filing at 62 because they need the money or fear that if they don't claim their benefits, they'll somehow lose out on them. But if you file for Social Security early and regret it later, you do have the option to undo your filing. As long as you withdraw your application for benefits within a year and repay the SSA all the money it paid you, you'll get a chance to file a new claim later on, thereby securing a higher monthly benefit.

Loose pile of Social Security cards

Image source: Getty Images.

2. You can collect a benefit even if you never worked

You might assume that if you don't have your own earnings history, you won't be eligible for Social Security once you retire. Actually, if you're married to someone who's entitled to a benefit, or are divorced from someone in that same boat, you may be eligible for a spousal benefit. Your spousal benefit is worth up to 50% of the benefit your current or former spouse collects, which could translate into quite a bit of retirement income for you.

3. You can avoid taxes on your benefits by choosing the right retirement plan

Many seniors are shocked to learn that in some cases, Social Security benefits are taxable at the federal level (and at the state level as well, for that matter). Whether you'll pay taxes on those benefits or not will depend on your provisional income.

Your provisional income is 50% of your annual benefit plus all of your non-Social Security income. You could be taxed on up to 50% of your benefits if that total falls between:

  • $25,000 and $34,000 and you're single
  • $32,000 and $44,000 and you're married

Furthermore, once the top end of each threshold is surpassed, you risk taxes on up to 85% of your benefits. To avoid having that happen, look at housing your retirement savings in a Roth IRA. Withdrawals from Roth IRAs are taken tax-free and don't count toward provisional income, so saving in one of these plans could leave you with a bigger Social Security check.

The more you learn about Social Security, the more opportunities you're bound to uncover to raise your benefits. And that could, in turn, put you in a much more financially secure place throughout your senior years.

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