Certainly! Social Security has many rules and provisions that aren’t widely known. Here are some lesser-known aspects:
- Spousal Benefits: You can claim spousal benefits based on your partner’s earnings record, even if you have never worked. The maximum spousal benefit is up to 50% of your partner’s primary insurance amount (PIA), assuming you wait until your full retirement age to claim.
- Divorced Spouses: If you are divorced but were married for at least 10 years and have not remarried, you may be eligible for benefits based on your ex-spouse’s work record. This won’t affect their benefits or those of their new spouse.
- Dependent Benefits for Grandchildren: Social Security may provide benefits to grandchildren if they are living with you and are dependent on you for support, and their parents are deceased or disabled.
- Special Minimum Benefit: There is a special minimum benefit for people who have worked for many years but have low earnings. This benefit ensures that people with a long history of low earnings receive a higher minimum benefit.
What is 401(k) and should we draw our 401(k) to delay claiming Social Security benefits?
- Earnings Test for Early Retirees: If you claim Social Security benefits before your full retirement age, your benefits will be reduced if you earn above a certain threshold. However, once you reach full retirement age, your benefits will be adjusted to account for any reduction due to early earnings.
- Wage Indexing: Social Security benefits are adjusted for inflation through wage indexing. This means your benefits are calculated based on the average wages of all workers, so they generally increase over time to keep up with the cost of living.
- Family Maximum Benefit: Social Security has a family maximum limit on how much can be paid out to a family. This rule limits the total amount of benefits a family can receive based on one worker’s earnings record.
- Delayed Retirement Credits: For each year you delay claiming Social Security benefits past your full retirement age until age 70, your benefit increases by a certain percentage. This can be as high as 8% per year, which can significantly boost your monthly benefit.
- SSDI and SSI Differences: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) are different programs. SSDI is based on your work history and the amount you’ve paid into Social Security, while SSI is need-based and doesn’t depend on your work history.
- Trial Work Period for SSDI: If you receive SSDI benefits, you can try working for up to nine months without losing your benefits. This period allows you to test your ability to work while still receiving your full SSDI benefits.
- Survivor Benefits: If a worker dies, their surviving spouse, children, or even sometimes parents may be eligible for survivor benefits. These benefits can be significant, especially if the deceased worker had a substantial earning record.
- Railroad Workers and Social Security: Railroad workers are covered by a separate system called the Railroad Retirement Board (RRB), but they also contribute to Social Security. The benefits they receive from Social Security are integrated with their RRB benefits.