The 14 Quirkiest Social Security Rules You Need to Know

Social Security benefits are one of the most important income sources for many retirees.

Unfortunately, the rules governing the Social Security retirement program are extremely confusing. That means far too many Americans don't know how these benefits work or how to maximize their retirement income.

To help you better understand the ins and outs of Social Security, here are 14 of the quirkiest rules you should know about.

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If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Every retiree is entitled to a "standard benefit" based on work history. Now, you may assume the age when seniors would be eligible for their standard benefit would be the same for everyone. But that's not the case.

While 65 used to be the key age to claim it, amendments to Social Security in 1983 changed that. Lawmakers wanted to push full retirement age (FRA) back, but they did so gradually. The result: The year you happened to be born now determines how old you must be to claim your full benefit.

Those born in 1955 can get theirs at age 66 and 2 months. But for someone born just a year later, that age moves up to 66 and 4 months. And for anyone born in 1960 or after, it's 67!

ALSO READ: Full Retirement Age for Getting Social Security

Social Security is funded by payroll taxes. Specifically, workers pay a 6.2% tax on earnings, and employers pay the same.

But while most Americans pay these taxes on all their income, this isn't true for everyone. In fact, Social Security taxes are collected only on income up to a "wage base limit." In 2021, that limit is $142,800. Any money earned above that amount isn't subject to any Social Security tax.

It may seem odd to exempt the wealthiest Americans from taxes on some of their earnings while lower-income and middle class Americans pay tax on every dollar. But the system is set up this way because benefits are based on what you paid in. If high earners paid in tens of thousands of dollars in taxes, they'd get huge monthly benefits.

Social Security bases your standard benefit amount on the (inflation-adjusted) average income you earned over your working life.

However, if you worked for more than 35 years, the Social Security Administration will count only your highest-earning years when calculating your benefit. This weird rule means that some years when you earned very little won't be considered.

If you earned money from investments, rental properties, distributions from a company, or other sources not subject to Social Security tax, none of that income counts either.

Some federal workers who paid into the Civil Service Retirement System also won't have all their earnings counted. And, as mentioned above, if you have income above the wage base limit that also won't count toward determining benefits.

The Social Security Administration always considers a 35-year work history when determining your average benefit. If you worked for less than that amount of time, the agency simply includes years of $0 wages in the calculation.

Of course, $0s drag down an average. And the more years of $0 wages you have, the bigger the impact.

That's why it's a good idea to try to work for 35 years at least. In fact, if you're earning a lot toward the end of your career, working an extra year or two could pay off thanks to this quirky Social Security rule allowing higher-earning years to push out lower ones.

ALSO READ: Maximize Your Social Security Benefits in 2021 With These 3 Moves

You're required to have worked a certain number of years to get benefits based on your own work record. But a weird Social Security rule actually allows you to get benefits based on your spouse's work history if doing so would net you more monthly money.

If you never worked, or if your spouse earned a lot more than you did, claiming spousal benefits could leave you better off. Likewise, if you're a widow(er) and your spouse was a higher earner or you never worked, survivor benefits could also be available.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

If you've divorced your spouse, you may think you're no longer entitled to spousal or survivor benefits -- but oddly, that's not the case. As long as your marriage lasted at least 10 years, these benefits may still be available to you.

Spousal benefits are available as long as you haven't remarried, while you can claim survivor benefits even if you have a new husband or wife as long as you didn't remarry until after age 60 (or age 50 if disabled).

If you're divorced, you can claim spousal benefits whenever you'd like once you turn 62, regardless of what your ex does.

But if you're still married, your spouse actually has to claim his or her benefits before you can get those spousal benefits.

This odd rule is part of the reason it's important to coordinate with your husband or wife and devise a claiming strategy that maximizes your combined Social Security income.

Although you become eligible for Social Security at 62, claiming so early is always before full retirement age. Waiting until at least your FRA will allow you to avoid early filing penalties that reduce your standard benefit.

And if you want even more than your standard benefit, you actually may be able to get it. Social Security allows seniors who delay claiming retirement benefits to increase the size of their monthly checks. In fact, each month you wait after full retirement age results in a bump up in income due to delayed retirement credits.

However, these can only be earned if you're claiming benefits based on your work history. If you claim spousal benefits, you get no benefit from a delayed start.

ALSO READ: Sorry to Say: You Probably Shouldn't Claim Social Security at 62

If you claimed benefits and regret it because you shrunk your checks, you may have an option to undo your mistake.

As long as it's been less than a year since your benefits began, you can rescind your claim. You can only do this once, though -- and you'll have to pay back all the benefits received.

If you've reached your full retirement age, you have the option to suspend your benefits if you want.

While it may seem odd to have a rule allowing you to temporarily stop getting money, there's a good reason to consider this. If you suspend your benefits, you become eligible to earn delayed retirement credits that raise the size of your future checks.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Social Security retirees get periodic cost of living adjustments (COLAs). Since these are designed to ensure benefits don't lose buying power, it's logical to assume the amount of your COLAs would be based on how much prices are rising for seniors.

However, under Social Security's quirky rules, that's not the case. Instead, benefits are based on price changes as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Since this isn't a great method of calculating rising spending for seniors, it's probably not surprising that benefits have been losing buying power for decades.

Working in your later years may seem like a fiscally smart decision. But if you haven't reached your full retirement age yet, Social Security actually penalizes you for earning too much.

If your earnings exceed a certain threshold, some of your benefits are temporarily withheld. Although the amount of your checks will be recalculated at full retirement age to account for the money missed, breaking even for it takes time and not everyone will do it.

ALSO READ: Your Guide to Working While on Social Security

Since Social Security benefits are earned based on a lifetime of paying taxes into the system, you may assume they're tax-free. But that's not necessarily the case.

In fact, higher-earning retirees with countable income above a certain threshold will pay taxes on up to 85% of their benefits. These taxes were originally supposed to apply only to a small minority of the wealthiest seniors, but now around 50% of retirees are taxed on their benefits.

Most states don't tax Social Security benefits. However, there are 13 states that do, at least in some circumstances.

As a result, where you happen to live as a retiree can affect the amount of benefits you get to keep. This rule could make you think twice about where you want to spend your golden years if you stand to lose some of your retirement income.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

While some of these quirky Social Security rules may seem odd, understanding them is key to making fully informed choices. Take the time to get to know the details so you can get the most income possible as a retiree.

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