Social Security seems simple on the surface. People work, pay social security tax, and then get a monthly benefit when they retire. For some people, it is that simple, but Social Security has some interesting quirks.  Here are the 6 unique or interesting things about Social Security that you may not know.

Full Retirement Age Depends on When You Were Born

People assume that their Full Retirement Age (FRA) is 66, but that may not be the case. You must be born between 1943 & 1954 for your FRA to be 66. People born between 1955 & 1959 have a FRA between 66 & 67. 1955 is 66 and 2 months, and every year it goes up by 2 more months. Anyone born in 1960 or later has an FRA of 67… for now.

Full Retirement Age is not your maximum benefit. You will have to wait until 70 to get your biggest monthly payment. The earliest someone can receive Social Security is 62, unless they are claiming survivor benefits which can be claimed as early as 60. Claiming early will reduce the benefit permanently.

Suspending Benefits

If you are between Full Retirement Age (FRA) and 70, you can suspend your benefits. You can restart them at any time before age 70, or they will automatically start again the month you turn 70. You will earn delayed retirement credits for each month that you suspend your benefits. This will ultimately increase your monthly payment once you begin taking social security again. This can be a great option for anyone who finds they have more income than they need either from a pension or working.

If you choose to suspend your benefits, keep in mind that anyone collecting benefits on your record will also have their payments suspended except for divorced spouses. You will be billed for Medicare Part B premiums that were being deducted from your social security payment.

Children Can Receive Benefits

This is one of the lesser-known benefits of Social Security, but it’s true! Children can receive benefits if one of their parents receives retirement or disability payments. The child can receive social security until they are 18 (or 19 if they are still in high school). A child will not automatically receive benefits, so if you think your child may qualify, you will have to apply with the SSA. In 2020, 4 million kids received benefits, which was more than I would have expected! 

Remarriage 

Will getting remarried have an impact on the social security you may have been entitled to from a previous spouse? It depends.

If your previous spouse has passed away, whether you were married or not at the time of their death, remarriage before age 60 will have an impact on potential benefits. Remarriage before age 60 will disqualify you from benefits unless you divorce. Remarriage does not affect any benefits your children may be receiving.

If your divorced spouse is still living and you get remarried at any age, your benefits from your previous spouse will no longer be available to you.

Death and divorce are two of the most complicated parts of SSI and individual circumstances can be different. It is always a good idea to check directly with the SSA with questions about your situation.

Working & Receiving Social Security

 If you are thinking about starting social security but are still making income or might start making an income again in the near future, it might be worth it to wait. You can earn income and draw Social Security at the same time, but if you are under FRA, your benefits may be reduced.

If you are under FRA for the entire year, any income you earn over $19,560 (for 2022) your social security benefit will be reduced $1 for every $2 you earn above the limit. In the year that you will reach FRA, the limit increases to $51,960 (for 2022) and benefits are reduced $1 for every $3 over the limit that you earned. However, only income earned up to the month of your birthday is counted, not the entire year. Once you reach your Full Retirement Age you can earn as much income as you want and it will not affect your social security benefits.

If you do have your benefits reduced, it’s not gone forever. The SSA will recalculate your benefit when you reach FRA and give you credit for the months your payment was reduced. The reduction of benefits is a good point to consider before beginning SSI if you think you may earn income.

Changing Your Mind About Social Security

If you started Social Security less than 12 months ago you can change your mind. This is called withdrawing your application. You will have to repay everything that has been paid out to you and you can only do this once. It is different than suspending benefits which were discussed earlier, but it can be the solution for someone who started social security but started earning income and they would like to stop benefits.

These are a few quirks of Social Security that many people are not aware of. Social Security is simple in concept, but complicated in practice and making the wrong decision can be costly. If you would like to discuss your own Social Security, contact us! We would be happy to help you sort through it.