Don’t Let These Weird Social Security Rules Catch You Off Guard

If you’re like most retirees, Social Security will be one of two primary income sources along with your savings. Since your retirement benefits from the Social Security Administration provide thousands of dollars in annual income and are probably your only guaranteed income source, knowing the rules surrounding these benefits is just common sense.

Unfortunately, some of the rules related to Social Security retirement benefits can be really strange. And most people don’t realize there are oddities in the regulations that affect the amount of money they bring home. In particular, there are three weird rules that apply to Social Security that it’s important to know and that may take you by surprise.

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1. You can’t undo a claim for benefits if more than 12 months have passed

Sometimes, you may come to regret filing for Social Security.

The good news is, if it has been less than 12 months since you originally requested your benefits begin, you have the option to undo your claim. You can rescind your claim within a year of first filing for benefits as long as you are willing to pay back the entire amount of money you received to date. If you do that, it will be as if you’d never started your checks at all — and you’ll have the option to raise your benefit by delaying when your checks begin.

Unfortunately, this option is available to you only within the first year of filing for benefits. If more than 12 months have passed, you’re stuck with your claiming decision. You can try to undo some of the damage that comes from an early claim by working enough while getting Social Security that your earnings exceed the limits that result in all or part of your benefits getting held back — but that isn’t always possible.

2. You can’t claim spousal benefits until your spouse has claimed them

Spousal benefits can be extremely valuable to lower-earning individuals who are married to partners who earned a larger salary. For those who are married but don’t qualify for Social Security based on their own work history, spousal benefits can also provide retirement income when none would otherwise be available.

But it’s important to understand the rules for claiming spousal benefits if you plan to rely on them. Specifically, the Social Security Administration will not allow you to start getting spousal benefits until your husband or wife has filed for their own checks.

The good news is, if you’re entitled to your own benefits, it’s possible to claim them in the meantime and switch to spousal benefits later. This can be a good strategy that allows a higher-earning spouse to maximize their Social Security income and to maximize survivor benefits while the lower earner is still bringing some Social Security checks into the household.

3. Working for less than 35 years shrinks your benefit

You may be aware that your Social Security benefit equals a specific percent of the average wage you earned over your career. But you may be surprised to find that the benefits formula considers a very specific number of years when calculating your career average benefit. Specifically, this number is always calculated based on the 35 years when earnings were the highest, regardless of how long you actually worked.

The effect of this rule is that anyone who worked less than 35 years will end up with an average wage that’s reduced by years of $0 wages being included when calculating it. And if you had a career span of exactly 35 years and you didn’t earn much during some of those years, any lower earning years could also drag down your average benefit. In this case, working longer could actually pay off.

Ultimately, it’s important to understand these three weird rules so you can make the best choice for both you and your spouse with regards to when you want your benefits to begin.

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