There are more Social Security benefits than you might think

And each comes with its own rules and stipulations. 

Retirement planning involves making some very important decisions regarding your federal pension benefit, Thrift Savings Plan investments and Social Security. This week, I’d like to focus on the last of these, because it includes a variety of benefits, each with a specific time frame for claiming and unique rules regarding payouts. 

Benefits You’ve Earned for Yourself

Employees who have paid FICA taxes on their wages can qualify for Social Security retirement and disability benefits based on their own work record. Retirement benefits are payable between ages 62 and 70. There is no reason to delay applying for benefits past 70, since there are no further delayed credits, and by this age, if you’re still working, you can get Social Security benefits without an earnings limit. The earnings limit ends after you reach your full retirement age—between 65 and 67, depending on your year of birth. (It’s 67 for those born in 1960 or later).

According to the Social Security Administration, in 2010, less than 20 percent of people delayed receiving Social Security retirement benefits past their full retirement age. But there are valid reasons to hold off:

  • The benefit payable at 70 is 76% larger than the one payable at 62 and will produce a substantially larger lifetime stream of income for those who exceed their life expectancy.
  • If you’re still working, the Social Security earnings limit could reduce or eliminate your benefit. In 2023, if you’re under your full retirement age, the annual earnings limit is $21,240.
  • In some cases, one spouse of a married couple delays claiming to produce a larger survivor benefit for the last remaining spouse. 

Delaying Social Security is a good way to protect against the risk of outliving your retirement savings and income. The benefits are payable no matter how long you live, and receive an annual cost-of-living adjustment. 

Of course, delaying Social Security runs the risk that you might not collect your benefits at all, or might receive a smaller amount than you paid in. For those who are retiring due to poor health, applying for Social Security early may be necessary and a wise choice. 

Benefits Your Spouse Has Earned for You

In 1939, Congress added survivor’s benefits and benefits for retirees’ spouses and children. At first only wives and mothers were eligible, but subsequent changes in the law allowed eligibility for dependent husbands and fathers. 

If you are married and both you and your spouse have worked, you will each be paid your own Social Security benefit. A working husband or wife is not limited to half of their spouse’s Social Security. (That rate applies to a spouse who never worked outside the home). 

You may be eligible for spousal benefits when your spouse files for retirement benefits. But you must be at least 62, or have a child under age 16, or a child in your care who receives Social Security disability benefits. Your spousal benefit can be as much as half of your spouse’s benefit payable at their full retirement age, depending on your age at retirement. However, if you are caring for a qualifying child, then the spousal benefit is not reduced. 

A person can be entitled to more than one Social Security benefit at the same time. For example, a retired worker could qualify for a benefit on their own work record and as a spouse on another record. But a person's benefit amount can never exceed the highest single benefit to which that person is entitled. Some benefits are calculated independently, with the larger benefit being paid, or the smaller benefit plus the excess amount of the larger one.

Other types of benefits are calculated with a carry-over reduction amount from the first benefit to the second. For example, if you’re eligible for a retirement benefit based on your own earnings, and that benefit is higher than the spousal benefit, then you will receive your retirement benefit. Many individuals are entitled to their own earned benefits as well as benefits based on their spouse’s work record. 

Benefits Based on a Deceased Spouse’s Work Record

Surviving spouses of Social Security covered workers might be entitled to benefits as a widow or widower. There are about 4 million surviving spouses receiving monthly Social Security benefits based on their deceased spouse's earnings record. For many of those survivors, the benefits help to provide the necessities of life.

If you’re entitled to retirement benefits, but haven’t applied yet, you have the option to apply for either retirement or survivor’s benefits first. You can switch to the other benefit later if it gets higher. Surviving spouses can receive reduced survivor benefits as early as age 60, and benefits are payable as early as age 50 if you have a disability that began within seven years of your spouse’s death. A surviving spouse who is caring for children who receive Social Security benefits, are eligible for benefits at any age. If a surviving spouse remarries after they reach age 60 (or 50 if they have a disability), the remarriage will not affect their eligibility for survivor’s benefits. 

Widows and widowers are due between 71 percent (at age 60) and 100 percent (at full retirement age) of what their spouse was getting before they died. The Social Security Administration has more information about survivor benefits.

Benefits Based on a Parent’s Work Record

Do you have an unmarried dependent child or children? Children of Social Security covered workers might be entitled to benefits based on a parent’s work record, including while the parent is still living. In 2021, Social Security paid an average of $2.8 billion in benefits to 4 million children whose parents (one or both) were retired, disabled or deceased.

To get benefits, a child must have either a parent who is retired or has a disability and is entitled to Social Security benefits, or a parent who died after having worked long enough in a job at which they paid Social Security taxes. An unmarried child can get benefits if they are younger than 18 or between 18 and 19 and a full-time student at an elementary or secondary school (grade 12 or below), or age 18 or older with a disability that began before age 22. Under certain circumstances, Social Security will also pay benefits to a stepchild, grandchild, step grandchild or adopted child.

Benefits Based on a Former Spouse’s Work Record

Former spouses of Social Security-covered workers are sometimes entitled to spousal or widows benefits based on the work record of their previous spouse. If you’re divorced and were married for at least 10 years, you may be eligible for some of your ex-husband or ex-wife’s Social Security retirement benefit. You can apply for benefits on your former spouse’s record even if he or she hasn’t retired, as long as they are eligible for benefits and you divorced at least two years before applying.

If, however, you decide to wait until your full retirement age to apply as a divorced spouse, your benefit will be equal to half of your ex-spouse’s full retirement amount or disability benefit. Widow and widower’s benefits are also payable to former spouses. For those who continue to work while receiving benefits, the same earnings limits apply as to other benefits.

You may be starting to realize that there are many variables involved when it comes to Social Security benefits, especially if you are entitled to benefits on more than your own work record. Do the math, and make sure you’re choosing the best option for your individual circumstances.