15 Finer Points About Social Security That You Should Know

Sooner or later, the odds are good that you'll count on Social Security to provide you with much-needed income at a key point in your financial life. Whether retirement is the first time you claim benefits or you have to receive disability benefits earlier in life, Social Security offers core financial support when you need it. Yet the ins and outs of Social Security can be complicated, making it difficult to figure out exactly what you're entitled to receive. The following 15 points offer some useful details about how Social Security works and what you can do to get the most from the program.

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You have a choice of when to start receiving retirement benefits from Social Security. Claim as early as age 62, and you'll receive smaller monthly checks. Wait as long as age 70, and those checks grow in size. Overall, the reductions and additions are intended to make the overall payments equal for those living to their typical life expectancy. But your own health can change that balance, making it smarter to make one choice or the other depending on whether you're relatively healthy or sick compared to the average retiree. 

In order to qualify for Social Security retirement benefits in your own name, you have to accumulate 40 work credits. That'll take at least 10 years, with a maximum of four credits available in any given year. For 2018, every $1,320 you earn gives you a credit.

To get spousal benefits, you need to have been married for at least a year. If your spouse dies shortly after you get married, you can only get survivor benefits if you were married for at least nine months. Some exceptions apply in the case of accidental death or death while in military service, or if you were both parents of a child who was under 18 when you got married.

Many people think they can claim spousal benefits as soon as they turn 62. However, spousal benefits only become available after your spouse claims regular retirement benefits. Until that happens, you're out of luck, and the only benefits you can claim are your own retirement benefits, if any.

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Children can get benefits from Social Security if their parents are eligible for benefits on their own work record. To qualify, a child must be unmarried and either under 18, in high school and no older than 19, or disabled. Relatively few children get Social Security because typically by the time their parents are old enough to qualify for retirement benefits, the children are too old to meet the age requirement.

If you're divorced and were married for at least 10 years, then you can qualify for spousal or survivor benefits based on your ex-spouse's work history. Shorter marriages don't give you the right to benefits via your ex-spouse.

Even if you qualify for benefits as a divorced spouse, you can lose them under certain circumstances. If you get remarried, you lose any spousal benefits based on an ex-spouse's work history, and if you remarry prior to turning 60, you'll lose any survivor benefits. Note that it makes no difference to your benefits whether your ex-spouse gets remarried.

To get disability benefits from Social Security, you need to work a certain minimum amount that varies depending on your age, and you also have to have a medical condition that will last at least one year and leaves you completely unable to work. Benefit amounts are based on your work history up to the date of your disability.

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Generally, decisions about Social Security are permanent. But you can request to withdraw your Social Security application using Form SSA-521 within 12 months of having claimed your benefits, and if the government grants the request, you'll be treated as if you'd never applied in the first place. Keep in mind that you have to return any benefits you've received prior to the request, and you can only get this do-over once. Still, it can be a good option if you feel like you've made a mistake.

In the past, retirees had the option to file for retirement benefits and immediately suspend them. That allowed a spouse or children to claim whatever spousal or children's benefits that they were entitled to receive, while letting their own retirement benefit potentially grow. Law changes ended this rule, and so only those who elected the file-and-suspend strategy during the period allowed by the legislation can still use it.

If your spouse dies, then you can get survivor benefits based on your deceased spouse's work record. You're eligible to receive these benefits as early as age 60 -- 50 if you're disabled -- but as with most benefits, you'll receive smaller payments the earlier you take them.

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One little-known strategy for surviving spouses is that you're still allowed to claim your own retirement benefits separately from your survivor benefit. That gives you the ability to claim one while letting the other grow. For instance, you could claim a smaller survivor benefit at age 60 while waiting until age 70 to claim your own, larger retirement benefit. That's not typically allowed for most other benefits, as you're usually deemed to apply for all eligible benefits at the same time.

Families in which many people are entitled to benefits on one person's work record face what's called the family maximum. This amount varies but generally works out to around 150% to 180% of the worker's benefit. The most common situation where family maximums come into play is when a person dies leaving a spouse and two or more children behind. Reductions are prorated across eligible recipients, except that the worker's own benefit never gets reduced.

Most of the funding that goes toward paying Social Security benefits comes from payroll taxes. Workers have 6.2% of their pay withheld from their paychecks toward Social Security, while employers have to match that with a payment of 6.2% of your salary as well. Self-employed workers pay the entire 12.4% as a portion of their self-employment taxes. Other funding includes trust fund interest and tax revenue from the income tax collected on some Social Security benefits.

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Many worry that Social Security's trust funds are expected to run out of money in the mid-2030s. However, the program will still get revenue from payroll taxes, and current estimates suggest that this revenue source will be enough to cover around 75% to 80% of benefits due. Policymakers hope that before then, they'll come up with a solution that can extend Social Security's viability further into the future.

It's important to take maximum advantage of your Social Security benefits in order to have a comfortable retirement. Keep these finer points in mind when it comes time to collect your benefits, and you'll be more likely to get every penny you have coming to you.

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