Retirement isn’t always final. Often, individuals will
retire and file for Social Security and later decide they’d like to continue
working for a while longer. When this happens, it typically leads to a few
questions about the impact to their Social Security benefit.
One of the most common questions is, “what happens if you
file for Social Security, but keep working? Could your benefits increase?”
I’ve also heard, “what if I’m making less in my ‘post-retirement’
job, could my Social Security benefit decrease?”
There are some cases where you
can receive retroactive Social Security benefits, usually delivered via a
one-time lump sum payment when you file for your retirement benefit.
Overall, this can sound like a
great deal. It might feel like a little extra, and the lump sum means you can
do what you want with that money right away instead of waiting for it to come
to you in monthly payments.
But are retroactive Social
Security benefits truly a good thing? Here’s what you need to know to make this
decision for yourself.
On paper, the Social Security system has a generous payment to beneficiaries of someone who retires, dies, or becomes disabled. But what catches many people by surprise is that there’s a limit to these payments.
The Social Security family maximum
benefits rule may stop you from getting the full amount you might expect.
This article takes a very deep dive into
the issue to explain both the common, well-known rules around the Social
Security family maximum benefits — and the more obscure rules that cause
benefits to be capped to a range of 150%-188% of a retired, deceased or
disabled individual’s full retirement age benefit.
We’ll also go
over the calculation, and teach you how to determine what kinds of benefits to expect
in your own situation.
The Social Security surviving spouse benefit seems easy
enough to understand. But hidden in the details are small nuances that can cost
you – or your loved ones – thousands of dollars in missed benefits.
If you invest the time to make sure you know the rules, you
won’t end up like the 10,000 people that a 2018 Office of the Inspector General report
discovered had been shortchanged by $131 million in Social Security survivor
Here, we break down what you need to know about ensuring you
receive all the benefits you’re entitled to in three, easy-to-digest sections:
It’s rare for me to have a guest article on my site. However, a few weeks ago, I had a meeting that disturbed me. As soon as the meeting was over I contacted Texas Elder Law Attorney John Ross and asked him to write this guide for my readers on how to use Medicaid Long Term Care to pay for nursing home expenses.
I just couldn’t see a story like this happen again.
It’s been a few weeks now, but I still think about this meeting often. Listening to the woman that I met with her and her story was heartbreaking. I felt so sorry for her — but there was nothing I could do to help her.
I’m sharing her story with you here in hopes that someone else won’t make the same mistakes.
Jo’s husband died when he was 44. Jo
was only 43, and up until that point, they ran a successful plumbing supply
business together. Jo and her husband earned a high income, and his passing
left her with the burden of running a demanding business alone.
She didn’t spend a lot of time
thinking about her future Social Security benefits at that point of her life.
But things are different now.
Jo is about to turn 60. She’s been told that she can qualify
for Social Security survivors benefits, and has also heard that the Social
Security Administration has a history of miscalculating these benefits — so Jo
wants to make sure she understands the math herself.
You Can’t Use the
Normal Calculations to Understand Social Security Survivors Benefits
Turning 66 in 2020? That means the maximum Social Security benefit you could receive is $3,011.
That’s no small sum! If you wanted to get that same amount
of income from a portfolio of retirement savings you’d need A LOT of money at
the beginning of your retirement.
And it could get even better for you if you waited to file for Social Security. In 2020, the maximum benefit for an individual who delayed filing for benefits until age 70 is $3,790 per month. That’s more than $45,000 per year in benefits!
What’s one of the most generous benefits available to retirees? That’s easy. It’s Social Security spousal benefits! These benefits are some of the most important, too.
Why? Because the spousal benefit can give your household income a big boost if you know all the rules about how to use it.
A recent Social Security report found that 2.3 million individuals received at least part of their benefit as a spouse of an entitled worker. Some of these spouses had benefits of their own, but were eligible to receive higher benefit because the spousal benefit amount was greater than their own benefit.
Others never worked outside the home or paid Social Security tax. They have no benefit of their own, but thanks to the Social Security spousal benefit available under their spouse’s work record, they can still receive payments.
This particular benefit doesn’t just provide retirement income, either.
As an eligible spouse, you could also receive premium-free Medicare benefits. Receiving these can help you reduce your out-of-pocket healthcare costs, allowing you to stretch your nest egg even further to create the retirement you want.
Clearly, Social Security spousal benefits offer serious value to those approaching the right age to file. So how do you access them, and what do you have to know to best work the rules?
Let’s take a look at what it takes to qualify as well as what benefits you may receive as an eligible spouse.
If you’re building a retirement income plan (and I hope you
are!), Social Security will likely play a role. As such, you need to know what
to expect in Social Security benefits when constructing your plan to ensure it
Unfortunately, your Social Security benefits estimate from the statements you can pull from the Social Security Administration is not the best source of information on what to expect in the future.
The issue lies with the omissions that the Administration
makes with their estimate methodology. To understand why this is a problem, we
need to start with a basic overview of the calculation used to create your
Social Security benefit estimate.