Author: Dan Caplinger | September 13, 2019
It's hard to get Social Security right
Tens of millions of Americans currently get Social Security benefits, and many more expect to receive monthly payments from the program later in life. But the rules governing Social Security are complicated, and too many people make critical mistakes that can jeopardize their benefits and keep them from getting as much from the program as they deserve. Click through to learn about 10 of the most common things people get wrong about Social Security.
1. Full retirement age is no longer 65
Social Security has always had an age at which you can receive full retirement benefits, but that age has changed over time. For those born in 1937 or earlier, full retirement age was 65, but it gradually rose for those born later. Full retirement age is 66 for those born between 1943 and 1954, and those born from 1955 to 1960 will see the age rise incrementally. 67 will be the age applying to those born after 1960, although some proposals suggest further increases might be on the horizon.
2. You have to work to get your own retirement benefits
Most Americans qualify for Social Security, but getting retirement benefits requires a minimal level of work. Usually, you'll need to earn at least 40 work credits to get a monthly retirement check. With a maximum of four credits per year and the need to earn $1,360 from a job to get each credit, even those with modest earnings can typically hit the target within 10 years.
3. To get spousal benefits, your spouse has to claim retirement benefits
Even if you've never worked, you can generally receive Social Security if you're married to someone who did meet the work requirement. However, to start getting those spousal benefits, your spouse needs to have claimed the regular retirement benefits Social Security pays. The same rule holds true for other family members who are eligible to draw benefits based on someone else's work history, such as a qualifying child claiming on a parent's record.
4. You only get one shot at a Social Security do-over
Sometimes, it turns out that claiming Social Security at a certain age looks like a mistake in hindsight. It used to be that you could withdraw your Social Security application at any time, filing Form SSA-521 and repaying any benefits received but then letting you wait to claim in the future. However, several years ago, the law changed to limit do-overs to the first 12 months after you claim benefits, and you can only do it once in your lifetime. That's still valuable, but it's not as useful as it once was.
5. Not all divorced couples can get benefits based on an ex-spouse
Some people find it shocking that divorced spouses can use an ex-spouse's work history to collect Social Security benefits at all. However, the Social Security Administration puts tough requirements on divorced spousal benefits. If you weren't married for at least 10 years, then you won't be able to make a claim on your ex-spouse's work history.
6. Getting remarried can affect your Social Security benefits
As useful as benefits are for divorced spouses, you can jeopardize them if you remarry. If your ex-spouse is still alive, then you'll have to give up your ex-spousal benefits if you get married again. The rules are different if your former spouse has passed away, however. In that case, remarriage before age 60 triggers the loss of survivor benefits, but remarrying at 60 or later has no effect.
7. Spousal benefits don't get an extra bump for waiting past full retirement age
For retirement benefits, you can receive delayed retirement credits if you wait until after full retirement age to claim your Social Security. Those credits add 8% to your monthly check for every year you wait up to age 70. However, spousal benefits max out at full retirement age, and there's no extra incentive to wait before claiming them.
8. Despite its financial challenges, Social Security won't disappear entirely
Social Security isn't having any problems paying benefits to all of its recipients right now, but that's expected to change within the next 15 years. With so many baby boomers retiring, the stress on the program will be enough that Social Security's trust funds are seen running out of money by the mid-2030s. That won't result in people getting no benefit at all, but without further action, current estimates suggest a benefit reduction of 20%.
9. Social Security benefits can get taxed
Many people believe that because they paid Social Security taxes on the wages they earned, their benefits should be free of tax in retirement. For many, they are. However, some of those whose countable income exceeds certain levels -- $25,000 for single filers and $32,000 for joint filers -- a portion of their Social Security benefits can be subject to tax. Because these threshold dollar amounts aren't indexed to inflation, more people every year become subject to this limitation.
10. Your Social Security decisions affect your family
It's tempting to base your decision on when to claim Social Security solely on your own financial situation. However, in some cases, what's best for you individually isn't best for your family as a whole. In particular, because survivor benefits for a spouse are based on when you claim your retirement benefits, you might be better off claiming later than you otherwise would in order to ensure that your loved ones will get bigger Social Security checks after you're gone.