It's simple, right? You pay into Social Security as long as you work and then when you're done, you get paid back month by month for as long as you live.
But it's not that straightforward, and knowing what you don't know can make a big difference when the time comes to collect.
Most folks, of course, are probably well aware that the longer you wait, the more you'll get, and that your Social Security benefits are taxed above income thresholds you may easily exceed if you keep working.
But there's much more to consider. Here are three other situations that might not be so familiar but are well worth knowing if they apply to you.
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1. You can get one do-over
Say you begin claiming Social Security benefits and then decide against it. If you're between 62 and your full retirement age (FRA) --, which is 67 for those born in 1960 or later and somewhere between 66 and 67 for those born from 1943 to 1959 -- you can do just that in the first 12 months after you start the payments.
Maybe you decided you don't like paying income taxes on your current benefits, or you want to go back to work and let the monthly payouts grow for a while. Whatever the reason, you can file what's called a "withdrawal of application for benefits," and if approved, you must repay what you and anyone else on your record have already received. And you can do it only once.
2. You may be able to claim spousal benefits before you retire
You can claim spousal benefits on your spouse's record even before you quit working or reach your full retirement age. The key is that your spouse has to claim retirement benefits from Social Security before you're eligible to claim spousal benefits. While claiming spousal benefits early will probably reduce payments compared to if you wait until FRA, by doing so, you might be able to maximize total lifetime benefits for your family.
3. Your ex-spouse may be able to collect on your work history
It's not just your current spouse who can collect benefits based on your work record. Your ex-spouse also can. The stipulations and amounts are many and varied, but generally you must have been married for at least 10 years.
It's important to note that those benefits won't affect those of your current spouse. And the SSA won't even notify you if your ex does apply for such benefits. But knowing that could play into your estate planning or other calculations.
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Know what you're doing to maximize what you get
These examples are just a few of the vagaries and variations of Social Security rules and regulations and how they can apply to your specific situation.
Fully understanding the ramifications is important for your retirement planning and for making informed decisions about allocating assets when it comes to estate planning.
The Social Security Administration website and the agency's representatives are a great place to start your research, but it's also a good idea to consult with a trusted financial advisor who can help you understand what you'll be getting and how it fits in with the rest of your nest egg.
