It is important to make the most of your Social Security benefits. The problem, however, is that the program is complex, and it’s easy to miss the benefits that are available or aspects of the program that can kill the benefits.
In particular, there are three things that many people don’t realize social Security. Just a little simple learning can prevent you from making costly mistakes.
1. Know when the benefits have reached their maximum
Different benefits have different rules that govern when you reach the maximum amount you can get. In general, waiting can increase the size of your Social Security checks, but there is always a point where there is no other reward than delaying getting your benefits.
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for retirement benefits, Delayed retirement credits Stop piling at age 70. Therefore, waiting after 70 will never get you a greater monthly return and will only mean losing the checks you would otherwise be entitled to.
However, the rules differ regarding spousal benefits. Deferred retirement credits aren’t available with spousal benefits, so your monthly check amount will max out when you reach your full retirement age, which for most recently retired people is between 66 and 67. It makes sense to wait until after your full retirement age if Your retirement benefit is likely to be greater than any spousal benefit you are entitled to.
2. If you’re divorced or remarried, find out how Social Security works
Many people are surprised to learn that Social Security benefits are often available to them Divorced couples. As long as you were married for 10 years or more prior to the divorce, you are generally eligible to receive spousal or survivor benefits based on your ex-spouse’s work history. However, those who have not reached the 10-year threshold typically do not qualify for any payments on the ex-spouse’s record.
Once you have these benefits, you can in some cases lose them if you remarry. To receive spousal benefits while your ex-spouse is still alive, remarrying at any age will result in forfeiting the benefits you receive based on your ex-spouse’s work history. Instead, you will be expected to make claims based on your new spouse’s work history.
Survivor benefits work differently. Even if you remarry, you can continue to collect survivors’ benefits based on your ex-spouse’s work history, as long as you wait until age 60 before remarrying. But if you remarry early, you lose these heir benefits.
3. Don’t forget the IRS
Another often overlooked fact about Social Security is that if your income is high enough, it can be part of your benefits. Subject to income tax. Specifically, the Internal Revenue Service takes half of your Social Security benefits and adds in most of your other sources of income.
If the total amount exceeds $25,000 for single filers or $32,000 for joint filers, then up to half of your benefits can be added to your taxable income. Cross the thresholds above $34,000 for individuals and $44,000 for joint members, and the amount of benefits you have to include in your taxable income can go up to 85%.
To control this, keep an eye on your other sources of income, especially optional distributions from retirement accounts that can boost your taxable income numbers. If you can make changes that improve your tax picture, it can also have the effect of making Social Security less subject to income tax.
Get the Social Security benefits you deserve
Getting the most out of Social Security is crucial to your financial security. Knowing these benefits and the potential pitfalls of getting them wrong can put you in a better position to avoid costly mistakes.
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