4 Bizarre Social Security Rules That Could Unravel Your Retirement

Close-up Of Hand With Pen And Eyeglasses Over Social Security Benefits Application Form.
AndreyPopov / Getty Images/iStockphoto

Social Security dates to 1935, when President Franklin Roosevelt signed the Social Security Act. Regular monthly benefits began in 1940, and in the 80-plus years since then, the Social Security Administration has enacted numerous rules that can impact your retirement benefits — some of which you might consider bizarre and a few of which can negatively impact your check.

Depending on Social Security alone in retirement is a losing proposition for most Americans because the average payment — about $1,833 a month, according to the AARP — is not nearly enough to fund a comfortable retirement.

Your retirement can unravel even further if you are impacted by certain Social Security rules that might seem a little weird. Here’s a look at four of them.

1. Benefits Drop if You Work Less than 35 Years

Social Security benefits are based on average indexed monthly earnings on up to 35 full working years, according to the SSA. The highest-earning 35 years are used in the calculation. If you work the full 35 years, you can maximize your Social Security check. If you work less than 35 years, your benefit won’t be as much — regardless of how much you earned during your career.

2. Working While You Collect Social Security Might Lower Your Benefit

There’s no rule against continuing to work and earn income even after you filed for Social Security retirement benefits, but doing so could reduce your monthly payment. When you begin receiving Social Security retirement benefits, you’re “considered retired” in the eyes of the SSA, according to its website. You can get Social Security retirement or survivor benefits and work at the same time. However, there’s a limit to how much you can earn and still receive full benefits.

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If you are younger than full retirement age for the entire year in which you earn extra income, the SSA deducts $1 from your benefit payments for every $2 you earn above the annual limit. In 2023, that limit is $21,240.

In the year you reach full retirement age, the SSA deducts $1 in benefits for every $3 you earn above a different annual limit. In 2023, this limit is $56,520. The SSA only counts your earnings up to the month before you reach your FRA — not your earnings for the entire year.

3. If You File Early, You Might be Stuck With Lower Benefits Forever

You can file for Social Security benefits as early as age 62, but the earlier you claim them, the lower your monthly payment. If you do file early and then regret the decision, you can undo the benefits claim — but only within 12 months of the original claim. If so, you can rescind the claim if you’re willing to pay back the entire amount of money you received, according to Motley Fool. Once you do this, it’ll be as if you never filed a claim to begin with.

Once a year has passed, however, you can’t undo the claim and you are stuck with the decision.

4. Spousal Benefits Can’t Be Claimed Until Your Spouse Has Claimed Them

If your spouse is the principal or only breadwinner in your household you can claim Social Security spousal benefits for yourself based on their career earnings. However, you can’t start getting spousal benefits until your spouse has filed their own Social Security claim, Motley Fool reported.

If you did earn income as a younger adult, you can claim benefits on that income before filing for spousal benefits. Even if your earnings were minimal during your working career, this is a good strategy if your spouse waits longer to claim their benefits.

Are You Retirement Ready?

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