3 Social Security Rules You May Not Know But You Should Smart Change: Personal Finances

(Maurie Backmann)

Social security is an essential source of income for millions of older people. It’s also a program loaded with rules, so much so that you could possibly spend hours and hours reading how it works.

Now, some social security rules are pretty well known. Many people, for example, know that you can register for Social Security as early as age 62, but for a reduced benefit. And many people know that deferring Social Security beyond full retirement age (FRA) results in a higher monthly benefit.

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But here are some rules you might not know.

Image source: Getty Images.

1. You can cancel your return once in your life

Claiming Social Security before FRA is a decision some seniors come to regret, especially because it leaves them with a lower monthly benefit for life. But if you’re upset about taking benefits sooner, you may still have the option of locking in a higher monthly salary from Social Security.

It’s a lesser-known fact that Social Security allows all filers to make one, so to speak. If you decide within a year that you regret your decision to apply for early benefits, you can withdraw your application and repay all the money you received in benefits. From there, you can enroll in Social Security at a later age and receive a more generous monthly benefit in the process.

2. If you are married, you cannot apply for a spousal benefit until your spouse has filed

Even if you have never worked and therefore never contributed to Social Security, you may still be entitled to a spousal benefit if you are married to someone eligible for Social Security. And your spousal benefit could be worth up to half of what your spouse is able to collect.

But if you think you’ll claim your spouse’s allowance before your spouse files for Social Security, think again. If you are divorced, you may be able to claim spousal benefits before your ex claims their benefit. But if you’re still married, you’ll have to wait for your spouse to register to receive your money. This is an important point to consider as part of your joint retirement planning.

3. You can work and collect benefits at the same time

You might assume that once you start collecting Social Security, you are not allowed to earn money through a job. Not so.

First, once you reach FRA, you can earn any amount of money through employment and continue to receive your full monthly Social Security benefit. And you can even earn money and collect benefits before FRA. If you choose this route, however, you will be subject to an income limit that changes every year. And if your income is too high, you may have some of your Social Security benefits withheld.

Know the rules

Although these Social Security rules are not as widely known as others, they are important points to keep in mind. And while you’re at it, you might want to share them with your friends so they can get the most out of their benefits too.

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