4 Social Security Loopholes Experts Want You To Know

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At its most basic level, Social Security is pretty straightforward. After a lifetime of paying Social Security taxes, retiring workers get to reap the benefits by receiving monthly checks for the rest of their lives.

But beneath the surface, there are many variables that can affect how much money you get in Social Security. Unfortunately, many of the most famous “loopholes” that could have gotten you more in Social Security payouts have been closed in recent years. However, there are still some strategies recommended by experts that you may be able to use to boost your payments.

Getting Benefits Even Though You Never Worked

The basic rules of Social Security are that you need to earn 40 “quarters of coverage” in order to qualify for benefits. But one of the “tricks” of the system is that it’s indeed possible to earn full benefits even if you never work a day in your life.

This quirk arises due to the provision for spousal benefits in the program. If you’re married to a retiree who qualifies for benefits, you yourself may qualify for up to 50% of your spouse’s benefit once you reach your full retirement age.

Important things to note about the spousal benefit are that you can’t claim it until you reach your full retirement age, and if your spouse filed early, you both will receive reduced benefits over the course of your lives. But an important exception exists — if you are also caring for a qualifying child, then you can avoid the reduction in benefits.

Are You Retirement Ready?

It’s also important to note that if you have worked and qualified for your own Social Security benefit, it may very well be higher than 50% of your spouse’s full benefit. In that case, you’ll receive the higher amount.

Claiming Benefits From an Ex-Spouse

Although the spousal benefit might fly a bit under the radar, a true “loophole” that is easy to overlook is that even ex-spouses may qualify. That’s right, even if you’re divorced, you may be able to receive a benefit based on your ex-spouse’s work record.

How does this work? Well, first of all, it’s only available to those who were married for at least 10 years before they got divorced. Otherwise though, the benefit operates pretty much like the standard spousal benefit. Assuming your own benefit isn’t higher, you can receive up to 50% of what your ex-spouse receives once you reach your own full retirement age.

There are a few restrictions of course. In addition to the requirement of a 10-year marriage, you must remain unmarried and be at least age 62. But even if you never worked at all and are divorced, you may still be able to receive benefits.

Maintaining Benefits After Your Spouse Passes

If your spouse passes away, you may become eligible for a new class of benefits: survivors benefits. Surviving spouses may receive as much as 100% of the deceased beneficiary’s payments. Here’s the breakdown of how much surviving spouses may receive after the death of the primary beneficiary:

  • At full retirement age or older — 100% of the deceased worker’s benefit amount
  • Age 60 through full retirement age — 71½ to 99% of the deceased worker’s basic amount
  • With a disability aged 50 through 59 — 71½%
  • At any age, with a child under age 16 — 75%
Are You Retirement Ready?

Surviving children and even dependent parents may receive benefits of their own as well. For example, a child under age 18, under 19 if still in elementary or secondary school, or with a disability can receive 75% of the decedent’s payout. Dependent parents of a deceased worker who are at least age 62 can receive between 75% and 82.5% of the primary recipient’s benefit.

Avoiding Benefit Deductions Before Full Retirement Age Even If You Still Work

Perhaps not surprisingly, Social Security retirement benefits are meant to be paid out after you actually retire. If you are not at full retirement age yet but are claiming Social Security, $1 from your benefit payments will be deducted for every $2 you earn above the annual limit. For 2023, that limit is $21,240. In the year you reach full retirement age, $1 in benefits will be deducted for every $3 you earn above a different limit of $56,520. One way to avoid these deductions would be to make sure your earnings don’t surpass these limits. That way, you can enjoy your benefits and your added income.

Starting the month you reach full retirement age, you can earn as much as you’d like and not a dime of your Social Security benefits will be deducted.

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