There’s a good chance that you, like many seniors, will come to rely on Social Security for income once your career comes to an end. And it’s important to know the program’s ins and outs to claim the highest benefit you can get.
Now there are certain Social Security rules you may be familiar with. For example, many people know that you can first file for benefits at age 62 and also, doing so results in a reduced monthly payday. But here are a few lesser-known Social Security rules that may be extremely helpful to you.
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1. Your benefits are based on your 35 highest-paid years of earnings
Social Security doesn’t pay all seniors the same amount of money each month. Rather, the monthly benefit you’re able to collect will hinge on your personal wage history — specifically, your earnings during your 35 highest-paid years in the labor force.
Why is this an important thing to know? It’s simple. Let’s say you’re nearing the end of your career, and you’ve only put in 33 years on the job. If you don’t work an extra two years, you’ll have a $0 factored into your personal benefits equation for those two years of missing wages. The result? Less money. But if you push yourself to work two more years, you can raise your benefit — and enjoy that extra income throughout your retirement.
2. There’s no financial incentive to delay a spousal benefit
You may know that if you hold off on claiming Social Security past full retirement age (FRA), you’ll boost your benefit in the process. But this only holds true if you’re claiming a benefit based on your own earnings record.
If you never worked or didn’t work enough to qualify for Social Security on your own, you may be eligible for a spousal benefit based on your current or former spouse’s record. But if that’s the case, don’t bother delaying your claim. That’s because spousal benefits aren’t eligible for delayed retirement credits the way regular benefits are. If you hold off on taking spousal benefits past FRA, you’ll simply deny yourself money you could’ve otherwise collected.
3. You can undo your filing once in your lifetime
Some people claim Social Security before FRA and regret that afterward. If you end up wanting a second chance at benefits, guess what — you might get one.
You’re actually allowed one Social Security do-over in your lifetime. If you want to undo a filing, simply withdraw your benefits application within a year and repay all of the money you received. From there, you can file for Social Security again at a later age — and potentially score a much higher monthly benefit in the process.
Arm yourself with knowledge
Reading up on Social Security rules may not be the most thrilling way to spend an afternoon. But the more you know, the better equipped you’ll be to make the most of the program — and set yourself up with a nice income stream throughout retirement.
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