It’s important to get the most out of your Social Security benefits. The problem, though, is that the program is complex, and it’s easy to miss available benefits or aspects of the program that can negate benefits.
In particular, there are three things that many people don’t realize Social Security. Just a little simple learning can potentially prevent you from making costly mistakes.
1. Know if your profit has been maxed out
Different benefits have different rules that govern when you maximize the amount you can earn. In general, waiting can make your Social Security check bigger, but there’s almost always a point where there are no other rewards to stop taking your benefits again.
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For retirement benefits, delayed retirement credits stop accruing at the age of 70. Therefore, waiting beyond 70 will not get you a large monthly payout and will only mean missing out on the check that you were otherwise entitled to receive.
However, the rules are different for spousal benefits. Delayed retirement credits are not available with spousal benefits, so the amount of your monthly check will max out when you reach your full retirement age, which for most new retirees is between 66 and 67. In this case, the only time it makes. It makes sense to wait beyond full retirement age if your own retirement benefits are potentially greater than the spousal benefits you are entitled to.
2. If you are divorced or remarried, know how Social Security works
Many people are surprised to learn that Social Security benefits are often available divorced husband. As long as you were married for 10 years or more before you divorced, you are generally eligible to receive spousal or survivor benefits based on your ex-spouse’s employment record. However, those who do not meet the 10-year threshold are usually ineligible for payments on the ex-spouse’s record.
Once you have that benefit, you can lose it in some cases if you remarry. For spousal benefits while your ex-spouse is still alive, remarrying at any age will cause you to lose any benefits you received based on your ex-spouse’s work history. Instead, you are expected to make a claim based on your new partner’s employment history.
The benefits of surviving work differently. Even if you remarry, you can still collect survivor benefits based on your ex-spouse’s work history, as long as you wait until age 60 before remarrying. Remarry before that, and you’ll lose survivor benefits.
3. Don’t forget about the IRS
Another fact that is often overlooked about Social Security is that if your income is high enough, a portion of your benefits may be eligible subject to income tax. Specifically, the Internal Revenue Service takes half of your Social Security benefits and adds many other sources of income.
If the total exceeds $25,000 for a single filer or $32,000 for a joint filer, then up to half of your benefit can be added to your taxable income. Above the upper threshold of $34,000 for singles and $44,000 for joint filers, and the amount of benefits you must include in taxable income can rise 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 figure. If you can make changes that improve your tax picture, they may also have the effect of reducing Social Security subject to income tax.
Get the Social Security benefits you deserve
Getting the most out of Social Security is important to your financial security. Knowing about these benefits and the potential pitfalls of getting it wrong can put you in a better position to avoid costly mistakes.
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