There are millions of older Americans today who rely on Social Security for retirement income. But because the program is so complex, it's easy enough to gloss over certain rules or simply not be aware that they even exist.
Now if you've ever done any reading on Social Security, you probably know that the earliest age to sign up for benefits is 62. You may also know that you won't get your complete monthly benefit based on your wage history until you reach full retirement age (FRA). But here are a few Social Security rules that may not have hit your radar.
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1. You can get a do-over if you file for benefits too soon
Age 62 is a pretty popular one for claiming Social Security, since it's the earliest age to sign up. You may decide to file for Social Security at 62 or at another point prior to FRA. But once you see how substantially that reduces your monthly benefit compared to filing at FRA, you may come to regret your decision.
Thankfully, you're not out of luck in that situation. If it's been less than 12 months since you started receiving Social Security, you can withdraw your application for benefits and file again at a later point in time, thereby potentially locking in a higher monthly payday for life.
However, to take advantage of this do-over option, you also have to repay all of the benefits you received from Social Security to date. If you have the savings or ability to do so, you can set yourself up with more monthly income.
2. You can file for benefits even if you never worked
Social Security is primarily funded by payroll taxes. You might assume that if you never worked and therefore never paid into Social Security, that you won't be eligible for monthly retirement benefits. But that's not necessarily the case.
If you're married to someone who's entitled to Social Security, then you're generally allowed to claim spousal benefits once your spouse signs up. Spousal benefits are worth up to 50% of the monthly payday your spouse receives.
You should also know that you can claim spousal benefits from Social Security if you're divorced from someone who's entitled to benefits. And if your relationship with your ex-spouse is far from amicable, worry not -- they get no say in whether you're able to collect those benefits or not. In fact, if you're divorced, you may not even have to wait for your spouse to sign up for Social Security to get spousal benefits yourself.
3. You can work and collect benefits at the same time
You might assume that once you start receiving monthly benefits from Social Security, you're no longer able to collect a paycheck from a job. But actually, working while collecting benefits is totally permissible. You may, however, be subject to an earnings-test limit if you're working and receiving Social Security before having reached FRA.
The earnings-test limits change every year. Currently, you can earn up to $22,320 a year without risking having a portion of your monthly Social Security check withheld. That limit also rises to $59,520 if you haven't yet reached FRA but will be reaching that age at some point in 2024.
The more you know about Social Security, the more you can potentially get out of the program. It pays to spend some time reading up on Social Security, even if retirement is still a good number of years away. Educating yourself is a great way to feel more secure about your financial future.
