15 Social Security Rules You Must Know Before Claiming Benefits

You may end up relying heavily on Social Security to pay your bills once you stop working, so it's important to claim benefits strategically. Here are some crucial rules to keep in mind before signing up.

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Social Security isn't just a handout everyone gets. To qualify for benefits, you need to accrue 40 work credits in your lifetime. The value of a work credit can change from year to year, and right now, it takes $1,510 in earnings to earn one credit.

The amount of money you get from Social Security isn't random. Rather, your monthly benefit is calculated based on the wages you earn during your 35 highest-paid years in the labor force. Those wages will also be adjusted to account for inflation.

If you don't put in a full 35 years in the labor force, you'll have a $0 factored into your personal benefit calculation for each year you're without an income. That could, in turn, result in a lower monthly payday for life. You might consider delaying retirement if you’re nearing the end of your career but don’t have 35 years of earnings under your belt.

Once you turn 62, you can sign up to start collecting Social Security. But if you don't wait until full retirement age to file, your benefit will be reduced -- and usually, on a permanent basis, leaving you with less monthly income for life.

ALSO READ: 3 Great Reasons to Take Social Security Benefits at 62

Full retirement age isn't universal. If you were born between 1943 and 1954, it's 66. If you were born in 1960 or later, it's 67. And if you were born between 1955 and 1959, it's 66 and a specific number of months.

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For each year you hold off on claiming Social Security beyond full retirement age, your benefit will increase by 8%. That increase will then remain in effect on a permanent basis.

Once you turn 70, you can no longer grow your Social Security benefit, and so it pays to file by your 70th birthday. But if you forget to file by age 70, don't panic. Even if you're a few months late, the Social Security Administration will pay you up to six months of benefits retroactively.

ALSO READ: Claiming Social Security at Age 70 Will Help You Manage These 3 Retirement Expenses

If you regret your decision to claim Social Security early, you can undo your filing once in your lifetime and sign up again at a later age. You'll just need to withdraw your benefits application within 12 months and also repay the Social Security Administration every dollar it paid you within a year.

You're allowed to earn money from a job and collect Social Security at the same time. But if you do so before reaching full retirement age, you'll risk having some of your Social Security benefits withheld if your earnings exceed a certain threshold. Once full retirement age kicks in, your wages won't impact your Social Security benefits at all.

Even if you didn't work and therefore didn't accrue enough credits to be eligible for Social Security, you may be entitled to benefits based on a current or former spouse's work record. Spousal benefits can be worth up to 50% of what your current or former spouse collects in Social Security.

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If you're married, you can't claim a spousal benefit until your spouse files for Social Security. If your spouse is delaying filing for a higher benefit, it means you may need to sit tight.

Though delaying your own benefit past full retirement age will result in a boost, you can't apply the same tactic to a spousal benefit. Therefore, it doesn't pay to hold off on claiming a spousal benefit past full retirement age.

If you're married, your spouse may be entitled to survivors benefits once you pass that are equal to 100% of your monthly benefit. Thus, you may want to consider delaying your filing to leave your spouse with a higher income stream.

ALSO READ: Everything You Need to Know About Social Security Survivors Benefits

Depending on your total income, the benefits you collect in Social Security may be subject to taxes. Before you file, think about what your income looks like. If you work part-time and expect to quit your job shortly, you may want to hold off on claiming Social Security until that happens.

Filing for Social Security won't necessarily mean getting your first benefit a few days later. It can take multiple weeks to process a Social Security application, so don't wait until the last minute to submit yours if you have a specific timeline in mind for getting your first payment.

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Social Security is a complex program that changes from year to year. The more you read up on it ahead of retirement, the better a position you'll be in to file for it strategically and make the most of it when you need it.

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