3 Overlooked Social Security Secrets Every Married retiree Needs to Know

Social Security retirement benefits tend to be quite simple. You put in your time working over many years. Once you reach the eligible age, you apply for Social Security. Then you start receiving the benefits. Simple as can be, correct?

Nevertheless, there might be several unexpected aspects regarding Social Security—particularly for those who are married. Below are three lesser-known Social Security regulations that every married retiree ought to be aware of.

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1. If your partner asserts that benefits can be significantly impactful, it could make a considerable difference.

It’s well-known that one partner may file for Social Security retirement benefits using the other partner's earning record. Nevertheless, the timing of when the higher earner files can significantly impact the outcome.

For instance, imagine Fred’s wife, Wilma, made significantly more money throughout their professional lives compared to him. Given this considerable difference in income, Fred stands to gain higher Social Security benefits by leveraging Wilma's earning record rather than his own. In fact, Fred could qualify for as much as half of Wilma's Social Security retirement benefit when she retires. full retirement age (FRA) .

Suppose Wilma decides to retire and claim her Social Security benefits before reaching her Full Retirement Age (FRA). In addition to decreasing her own benefit amount, this decision will also lessen the amount Fred can receive.

If Wilma decides to wait until she turns 70 to file for her Social Security retirement benefits, this will boost her payments; however, it won’t affect Fred’s spousal benefits. Keep in mind that Fred is limited to receiving an amount equal to up to half of what Wilma would be entitled to at that time. at her FRA However, Wilma delaying her benefit receipt until she reaches 70 might also assist Fred in an additional manner — by boosting his survivor benefits should Wilma pass away first.

2. Husbands or wives may start by claiming benefits according to their own income records and subsequently change to receive spousal benefits under certain conditions.

A lesser-known provision of Social Security allows lower-earning spouses to first file for benefits using their individual work record, before potentially switching to receive spouse’s benefits—assuming this comes from the earnings history of their higher-earner partner—in certain situations. Adopting such an approach might help a married couple optimize their combined retirement payouts.

Let’s once more consider Fred and Wilma as case studies. Assume Fred is three years senior to Wilma. At age 67, when he reaches his Full Retirement Age (FRA), Fred opts to start claiming his Social Security benefits. Meanwhile, Wilma, who is 64 at this point, keeps working until she hits her own FRA at 67 before applying for her Social Security retirement payments. Upon reaching her full retirement age, Fred might file for derivative spousal benefits using Wilma's earning record and potentially qualify for increased payouts.

Nevertheless, this approach fails when one partner with greater earnings has already started receiving Social Security benefits. To illustrate, let’s say Wilma began claiming her benefits at 64 years old, whereas Fred did so later. In such a case, Fred’s benefit amount would depend on which figure is larger: the total derived from his own employment history or half of what Wilma receives (adjusted for early collection penalties as she filed prior to reaching full retirement age).

3. If one partner works and also receives benefits, this could impact the other partner’s benefit amounts.

Social Security will reduce your retirement benefit by $1 for each $2 you earn beyond a certain yearly threshold if you remain below your Full Retirement Age (FRA) throughout the entire year. This reduction is referred to as the Social Security earnings test The yearly cap stands at $23,400 in 2025. If you exceed a specific annual threshold once you've reached your Full Retirement Age (FRA), Social Security will reduce this amount by $1 for each $3 earned over that mark. In 225, this elevated limit is set at $62,160.

Nevertheless, numerous retired couples may be unaware that if one spouse continues working while collecting Social Security benefits, it could impact the other spouse’s benefits. This scenario typically occurs when a lower-income earning spouse relies on the benefit records of their higher-earning partner.

Imagine a scenario where Fred and Wilma, as discussed earlier, decide to file for their Social Security benefits simultaneously. Wilma is 62 years old, whereas Fred is 65. Similar to before, Fred’s benefits depend on Wilma’s employment record. If Wilma opts to keep working and surpasses the yearly income threshold, Social Security will reduce both of their benefit amounts. and Fred's benefits.

The positive aspect is that these reductions are short-term. Once you attain your Full Retirement Age (FRA), the income caps will cease to apply, and the deducted funds will gradually be returned to you over a period of time.

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