3 Important Social Security Rules

Feb 9, 2020 | Social Security

One day, you will depend upon a combination of your annuity payments, withdrawals from your Thrift Savings Account, and a monthly Social Security benefit to provide your retirement income. With regard to Social Security benefits, there are three things you should know as you plan for retirement, so that you can maximize your potential benefits.

There’s more than one type of Social Security benefit. We all tend to assume that our Social Security benefit will be calculated according to our work records. That is true, if you claim your own benefit. However, the options of spousal benefits, divorce benefits, and survivors benefits also exist.

If your spouse’s benefit is higher than your own, you might opt for the spousal benefit instead. This rule also applies to those who are divorced or widowed, but were married at least ten years first. Since Social Security won’t automatically notify you of eligibility for these benefits, you must take action to inquire about them.

A longer working history can translate into a larger benefit. Your benefits are calculated based upon the 35 highest-earning years of your career. If you work less than 35 years, zeros averaged into the formula will bring down your benefit amount. On the other hand, working longer than 35 years can help you increase your benefit amount, assuming that you’re adding more high-earning years into your history.

The age at which you file your claim impacts your benefit amount. Everyone is assigned a full retirement age based upon their date of birth, currently ranging between 65 and 67 years old. This is the age at which you can claim your full benefits as calculated by Social Security and based upon your earnings record.

You can claim Social Security benefits as early as age 62, but the monthly amount will be reduced by about 25 to 30 percent. Conversely, you can wait beyond your full retirement age to claim benefits, and your monthly check will be 8 percent higher for each year that you delay. This increase in benefits stops at age 70, so there’s usually no reason to delay your claim beyond that age.

Social Security is a complicated program, and there’s plenty more to know about it. If you need help estimating your future benefits or deciding upon the right time to retire, give us a call and we’ll be happy to help clarify things.

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