It’s important to get the most out of your Social Security benefits. The problem, however, is that the program is complex, and it is easy to lose benefits that are available or aspects of the program that can eliminate benefits.
In particular, there are three things that many people don’t know about Social Security. A little simple learning can prevent you from making many mistakes.
1. Find out if your benefits have increased
Different benefits have different rules that govern when you exceed the amount you can get. In general, waiting will make the size of your Social Security checks larger, but there is almost always a point where there is no more reward from delaying getting your benefits.
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For retirement benefits, delayed retirement credits stop accruing at age 70. So, waiting past 70 won’t actually give you a bigger monthly payment and just means missing out. of the checks you may receive.
However, the rules are different for spousal benefits. Delayed retirement credits don’t apply to spousal benefits, so the amount of your monthly check increases when you reach your full retirement age, which for most people who retire recently is between at 66 and 67. In this case, the only time it did. It makes sense to wait past full retirement age when your own retirement benefit may be greater than any spousal benefit you are entitled to.
2. If you’re divorced or remarried, learn how Social Security works
Many people are surprised to learn that Social Security benefits are often available for divorcing spouses. As long as you were married for 10 years or longer before you divorced, you are generally eligible to receive spousal or survivor benefits based on your ex-spouse’s work record. However, those who do not meet the 10-year threshold generally do not qualify for any ex-spouse record payments.
Once you have those benefits, however, you can lose them in some cases if you remarry. For spousal benefits while your ex-spouse is still alive, remarrying at any age will make you lose the benefits you received based on your ex-spouse’s work history. However, you are expected to make claims based on your new spouse’s work history.
Survivor benefits work differently. Even if you remarry, you can continue to collect survivor benefits based on the ex-spouse’s work history, as long as you wait until age 60 before remarrying. However, remarry early, and you lose survivor benefits.
3. Don’t forget about the IRS
Another often overlooked fact about Social Security is that if your income is high enough, a portion of your benefits may be subject to income tax. Specifically, the Internal Revenue Service takes half of your Social Security benefits and adds most other sources of income.
If the total exceeds $25,000 for single filers or $32,000 for joint filers, then up to half of your benefits can be added to your taxable income. Above the higher threshold of $34,000 for singles and $44,000 for joint filers, and the amount of benefits you must include in taxable income can rise to 85%.
To control this, keep an eye on your other sources of income, especially optional distributions from retirement accounts that can boost your taxable income numbers. If you can make changes that improve your tax picture, they can also have the effect of making lower Social Security lower income taxes.
Get the Social Security benefits you deserve
Getting the most out of Social Security is important for your financial security. Knowing about these benefits and the potential pitfalls of making this mistake can put you in a better position to avoid costly mistakes.
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