Retiring Soon? Know These 3 Social Security Rules

There’s a good chance that once you retire, Social Security will play a big role in helping you manage your bills. And so it’s important to set yourself up with a monthly benefit that lends to paying your expenses and enjoying life once your time in the workforce comes to an end.

If you’re on the cusp of retirement, it’s especially important to read up on Social Security so you can establish a smart strategy for claiming benefits. And that means familiarizing yourself with these key rules.

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1. Delaying your filing will boost your benefits

The monthly benefit you get from Social Security will be calculated based on your 35 highest-paid years of earnings. From there, the age you sign up for benefits at will dictate how much monthly income you actually receive.

If you file for Social Security at full retirement age, or FRA, you’ll get your complete monthly benefit based on your earnings history. FRA kicks in at 66, 67, or somewhere in between, depending on your year of birth.

Meanwhile, you can sign up for benefits as early as age 62. But for each month you file ahead of FRA, your benefits get reduced.

On the flipside, delaying your filing could pay off big time. For each you hold off on claiming Social Security past FRA, your benefits grow 8%, up until age 70. That means you have the potential to lock in a permanent 24% to 32% boost for life.

2. You can claim spousal benefits if that’s the better deal

Social Security benefits are earnings-based. But your benefit doesn’t have to be based on your wage history if you weren’t a very high earner. Instead, you could claim a spousal benefit if that means getting more money.

The maximum value of a spousal benefit is 50% of what your current or former spouse collects. And if you’re still married, you’ll need to wait for your spouse to start receiving Social Security before you can get spousal benefits yourself. But still, it may be the case that half of what your spouse is entitled to is more than 100% of your monthly benefit.

3. Your spouse can collect your benefits once you pass away

You may be eager to start receiving Social Security as soon as possible, even if that means filing before FRA and reducing your benefits in the process. But one thing you should know is that once you pass away, your spouse will be entitled to survivors benefits that equal the monthly benefit you collect. And so the higher that benefit is, the more income you’ll leave behind for your spouse.

Keep in mind that even if your spouse is eligible for Social Security based on their own earnings history, if your monthly benefit is higher, your spouse’s benefit will be bumped up once you pass away. So delaying your filing could work to your family’s advantage in that regard.

Know the rules

Social Security is a complex program that’s loaded with rules. Be sure to learn more about how it works as you get ready to bring your career to a close.

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