Figuring out your Social Security filing strategy can be a complex process, and it’s easy to make mistakes. We’ve covered some of the biggest traps to avoid while considering your benefits, so here are three lesser-known traps to watch out for.
Deferring Your Social Security Spousal Benefit
We’ve written here before about how it’s generally best to wait until 70 to start claiming Social Security benefits, but that same strategy shouldn’t be used when it comes to a spouse. Per ItemLive:
The most your spouse may receive is 50% of the monthly benefit of the primary account that you are entitled to at full retirement age. If your spouse waits past his or her full retirement age, he or she is leaving money with the government.
The Number of Highest-Earning Years Worked Matters Most
Waiting until 70 can make a huge difference in your monthly Social Security checks, but a lesser-known factor that goes into the equation is how many years you’ve worked.
The Social Security Administration averages your 35 highest-earning years to figure out your benefits amount. That’s great if you’ve been working for 35-plus years and making good money, but what if you haven’t?
If you haven’t managed to work 35 years before deciding to claim Social Security, the administration will put a zero in for every year you didn’t work. That can make your benefit plummet. You also need to consider those years that maybe you didn’t have such a great job, or you were out of work for a period of time because they can also bring that average down.
It’s something to consider for your filing strategy, especially if you are tossing around the idea of collecting early or collecting while still working. Working an extra year or two could knock some of those thinner years off.
Remarriage and Social Security
This obviously doesn’t apply to everyone, but knowing how remarrying and Social Security interact can be helpful down the road. The first thing to remember is that if you are divorced and still unmarried, you are eligible to collect benefits from your previous spouse if you meet these four criteria, per Social Security’s guidelines:
- You were married for at least 10 straight years.
- You are at least 62 years old.
- Your ex-spouse is eligible for retirement benefits.
- You are currently unmarried.
But that all goes away the moment you remarry — unless your new spouse passes or another divorce occurs. A new life journey is a great thing, but it’s nice to have a heads up that the Social Security Administration will cut you off.
In the end, everyone’s situation is unique, so being up on some of the lesser-known, outlier case rules can help when considering your Social Security filing strategies.
• You can find all of the latest and most important news about Social Security here on Money and Markets.