There are more than 2,700 rules in Social Security’s handbook. It’s enough to make you want to give up on ever figuring out the best choices to make for your retirement. But if you do your homework and fully maximize your benefits, it will mean more freedom and security as you age. There are some straightforward ways to get started on Social Security planning, such as keeping track of your earnings and benefits with an online account and evaluating your health and wealth. But diving into all those rules can be a little terrifying.
Larry Kotlikoff, professor of economics at Boston University, says maximizing your benefits can be simplified into three basic rules: Delay your Social Security benefits, take spousal/survivor/mother and father/child benefits, and make sure one of these two rules doesn’t undermine the other. The best choice when it comes to when to cash in on your Social Security ultimately comes down to personal circumstances, but waiting to collect higher benefits through the delayed retirement credit can be a huge advantage.
These guidelines are a good starting point, but a lot of the finer details can be confusing, especially when it comes to spousal benefits. Since the most complex rules can be the most lucrative, it’s worth some investigation. The problem is most Americans are unaware of the finer points of Social Security and don’t know where to turn for help. Social security offices are dwindling and phone wait times are getting longer, so the smartest course of action is to arm yourself with information as early as possible. Even the Social Security Administration (SSA) is known for spreading misinformation, so double-check and triple-check your information before making a big decision about your retirement.
On PBS NewsHour’s Making Sen$e, Kotlikoff compiled a list of 34 social security secrets people should know, as well as some additional rules in a follow-up article. His findings are particularly useful if you’re looking for explanations of the many highly nuanced rules for collecting spousal benefits. Bear in mind his list was compiled back in 2012, but Kotlikoff continues to report on Social Security and work to demystify the finer details. You can even write in and ask him a question regarding your situation.
Spousal benefits are the most overlooked Social Security benefits, according to Kotlikoff, and $10 billion in spousal benefits go unclaimed in America every year. In what can be called loopholes for married couples, Americans can collect more in Social Security by employing strategies like “file and suspend,” in which one partner suspends retirement benefits so the other can collect spousal benefits. Later, the couple can cash in on the delayed retirement credit.
Taxpayers are essentially walking away from money they are entitled to if they don’t take advantage of all the Social Security rules that could help them. Here are ten more little-known Social Security rules that could help you maximize your benefits, sourced from Kotlikoff’s list as well as others.
1. You can suspend your benefits temporarily and see rewards later
Once you are at or over full retirement age, you can suspend further Social Security benefits and then restart them later. The “start-stop-start” strategy refers to starting your benefits prior to full retirement age, stopping them at full retirement age, and starting them up again at age 70 when they will be 32% larger due to the delayed retirement credit.
2. You can withdraw and repay Social Security, then collect more later
As long as you repay all the benefits you received, you can withdraw your Social Security claim and then reapply at a later date (when you will get higher benefits based on your age). The SSA used to allow claim withdrawals at any time, but after it became more common, the rules were changed. Now you can only withdraw your claim within 12 months of receiving benefits, and you can only withdraw a claim once in your lifetime.
3. In some states, you can collect unemployment and Social Security at the same time
Americans can be both unemployed and retired in certain states. If you collect checks from both agencies, you just have to report the income of both. Receiving unemployment benefits won’t affect your Social Security payments, but in some states, collecting Social Security can reduce your unemployment checks.
4. You can shop around for the best deal
You can go to several Social Security offices and receive different benefit estimates. This is because Social Security staff have differing interpretations of the rules, although there is only one that is correct. But just as you may be able to shop around for the best estimate, make sure a social security office isn’t erroneously denying you a legal benefit, such as the right to file and suspend.
5. Delaying your divorce can lead to more benefits
If you’re divorced but were married for at least 10 years, you can collect spousal benefits. So if you’re getting divorced after about 9 and a half years, it would be wise to delay your divorce, since it will mean a payout for both you and your ex. You have to wait to collect until your ex is 62, but if you aren’t 62 yet you can still get benefits at a reduced rate.
6. Survivors can file and suspend before full retirement age
A widow/widower can begin benefits based on his or her own earnings record and later switch to survivors benefits or, conversely, begin with survivors benefits and later switch to their own benefits — even if the surviving spouse is filing before full retirement age. With spousal benefits, on the other hand, you cannot file and suspend before full retirement age.
7. There’s no advantage to delaying spousal/survivor benefits after full retirement age
It does not benefit you to delay collecting either your spousal or survivor benefits past your full retirement age. Your own retirement benefits will grow if you delay, but there’s no reason to wait so long to collect spousal or survivor benefits.
8. In some cases, you won’t be penalized for working
If you take retirement, spousal, or widow/widower benefits early and lose some or all of them as a result of Social Security’s earnings test, don’t worry too much. The SSA will actually give you credit for the money they’ve docked in the form of permanently higher benefits once you reach full retirement age. Be advised, however, that in the case of mother and father benefits, if you earn too much money, you lose the docked money for good.
9. Widows and widowers can get benefits for children under age 16
Father and mother benefits are available to widows and widowers who have a child under age 16 (of the deceased worker). These benefits are available regardless of the survivor’s age and they will never be reduced. It’s important to note that survivor benefits are reduced if you take them before full retirement age, but mother/father benefits are not, so it’s often wise to take the mother/father benefit first.
10. If you are collecting retirement, your children could get benefits too
If you still have young children when you retire, perhaps because you adopted or had children later in life, they can collect child benefits through and including age 17 (or age 19 if they are still in secondary school). These child benefits are available only if you or your spouse or ex-spouse are collecting retirement benefits.