Taking advantage of Social Security benefits can help make your payments go much further. The Social Security Administration supports approximately 69 million Americans, most of whom are senior citizens and/or retirees. The average Social Security payment paid out to beneficiaries is just under $2,000 per month. These payments, however, are often not nearly enough for recipients to live off of. To make your payments stretch further, here are seven secrets you may not know about Social Security.
Be aware of how to maximize your SSA benefits
When it comes to programs like Social Security, there are often key pieces of information that you may not be aware of on how to maximize benefits. This is especially true if you find yourself in a position where your spousal status changes, you decide to claim your benefits early, or if you become widowed. While the payments are relatively straightforward, lifestyle changes and decisions such as these have an impact on your benefits.
Being aware of ways to optimize your income from any source is crucial to not only ensure you receive what you are fully entitled to, but it can also be beneficial from a tax perspective. Many individuals who have investment incomes and other assets, for example, are often not aware of the numerous ways you can structure or report that income to reduce your tax liability, maximize deductions, and take advantage of available credits or deferrals that can significantly improve your overall financial position.
Top 2 most shocking Social Security secrets
Kicking us off, did you know that if you are divorced, you may still benefit, and be entitled to, your former spouse’s Social Security payments? Social Security spousal benefits become valid after ten years of marriage, and this rule still stands even after you and your spouse divorce, provided you were married for at least ten years. You can still collect spousal benefits based on up to half of your former spouse’s benefits.
The second most surprising thing you may not know about Social Security benefits is that you can actually reverse your decision on when you decided to claim your benefits within the first year of claiming. If you decided to claim your benefits earlier, but for whatever reason decided you would rather wait to claim, you can do so as long as you pay back all the benefits received, including spousal and child benefits.
Additional Social Security secrets to boost your financial security
In addition to these two security secrets, here are five others you may not know about:
- Children can receive survivor benefits if they are under the age of 18.
- You can keep working while receiving benefits before the full retirement age, as long as you do not earn over $23,400
- While the Administration often encourages you to wait as long as possible before you claim, once you reach the full retirement age, there is no additional benefit to you.
- You don’t pay federal taxes on Social Security based on Roth IRA withdrawals, but withdrawals from 401(k)s, traditional IRAs, and other tax-deferred accounts do count.
- Be careful when using the online Social Security calculator estimate, as these do not take into account spousal, divorcee, child, mother, father, widow, or widower benefits, or file and suspend options.
Understanding lesser-known facts about your Social Security payments will ensure that you receive the maximum amount of income possible in your retirement. However, it is important when preparing for your retirement that you do not rely only on Social Security to support you. Make sure that you create an extensive and diverse income strategy that draws upon a variety of sources, so that you have a variety of income sources to draw upon, which ensures you can retire comfortably.
