Three Surprising Things About Social Security That Everyone Should Know

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For most people, Social Security is going to be an important part of their retirement income.

But in spite of how well known this program is, and the fact that its coverage is nearly universal, and that you probably have a lot of friends, neighbors and relatives already drawing benefits…there are plenty of things about Social Security that might really surprise you. Here are just 3 typical examples:

Spousal Benefits:

Did you know that even if you have never worked a day in your life, and have never contributed to Social Security, you can draw spousal benefits based solely on the fact that you are married to someone who is eligible for benefits? That’s right. A lot of people have no idea that spousal benefits even exist…so to them, it’s like free money. Of course, you are always entitled to your own benefit based on your own work history, if that’s higher. But even if you have NO work history, you’ll be eligible for your spousal benefit, which will be equal to one half of the working spouse’s benefit. Plus, the spousal benefit does NOT reduce any of your benefit if you contributed to social security through your own job…it’s strictly an additional benefit. In order to qualify, the working spouse has to be eligible for their own benefit, and the spouse must be at least 62 years old. Keep in mind that the longer you both wait to receive benefits, the higher the monthly benefit will be.

Benefits for Divorced People:

Here’s more good news for those that have gone through a divorce: Did you know that you can claim Social Security benefits based on your ex-spouse’s work history? That’s right. Even if your ex-spouse has remarried, you can draw spousal benefits, as long as you qualify. To qualify, you must have been married for at least 10 years prior to getting divorced and you must not have remarried. If you have remarried, you can only qualify for benefits based on your current spouse’s work history. Another very welcome surprise is that these benefits are completely independent of whatever decisions your ex-spouse makes regarding their own benefit and does not impact or reduce their benefit in any way. They do not even have to have filed to receive their own benefits for you to receive yours. The only requirement is that the working ex-spouse is ELIGIBLE to receive their own benefits. This can be a really nice unexpected bonus at retirement for people who have gone through a divorce.

The Advantage of Waiting:

Many people know that taking their Social Security early will result in a reduced benefit. For this purpose, “early” means before your normal retirement age (NRA), which for most people is currently around age 66. But did you know that if you wait until past your NRA, your benefits will continue to increase? That’s right…for every year you wait, your benefit will increase by an average of 8%, all the way until you reach age 70. That means that if you wait until age 70, your benefit will be about 32% higher, for the rest of your life! So how do you decide if you should wait? One way to decide is if your family has a history of longevity, and you are in good health, then it often makes sense to wait. Another way to decide is if you have other income sources and don’t need the money right away, particularly if you are still working at least part time, which has become a common trend these days. So remember: it can pay to wait!

The upshot of all of this is that Social Security is an important part of retirement planning for most people, and there are a lot of rules to be aware of that might have a significant impact on your overall situation.

So make sure you are educated on all your options and feel free to call me if you have any questions.