Social Security is a complex program that, as you might imagine, is loaded with different rules. And some of those rules are fairly well-known.
You might, for example, be aware that if you sign up for Social Security before having reached full retirement age (FRA), your monthly benefits will be permanently reduced. You may also be aware that if you delay your Social Security filing past FRA, you'll accrue delayed retirement credits up to a certain point that could boost your monthly benefits substantially.
But some of Social Security's rules may be a lot less obvious. Here are three that may not have hit your radar, but that you'll want to be aware of nonetheless.
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1. If you're divorced, you can claim spousal benefits on your ex's record before they file
Social Security benefits are commonly earned by collecting wages, paying taxes into the program on those wages, and accumulating work credits as a result. But it's possible to collect Social Security without an income history via spousal benefits.
If you're married to someone who's entitled to Social Security, once they file for benefits, you're eligible for spousal benefits that equal as much as 50% of what your spouse collects. But you can also file for spousal benefits if you're divorced. And in that case, the process of signing up is a bit different.
When you're divorced, you do not necessarily have to wait until your ex-spouse claims Social Security to file for benefits yourself. And you'll still be eligible for up to 50% of the monthly benefit your ex-spouse is entitled to.
To qualify for spousal benefits from Social Security as a divorcee, your marriage needs to have lasted for at least 10 years. You also have to be divorced for two years or more, and you can't be remarried.
2. You can undo your filing if you claim benefits too soon
The earliest age you can sign up for Social Security is 62. But as mentioned, filing for benefits before FRA will mean permanently reducing them in the process. And if you were born in 1960 or later, FRA doesn't arrive until you turn 67.
If you claim Social Security early and come to regret it, you are allowed to undo your filing once in your lifetime. That way, you can sign up again at a later age and potentially avoid a reduction in benefits.
To take advantage of this option, though, you need to undo your claim within 12 months of applying for benefits. You also have to pay back all of the money you received in Social Security to be able to file again at a later date.
3. You can collect benefits retroactively
Some people choose to delay Social Security past FRA to boost their benefits in the process. But you might encounter a scenario where you've delayed your claim but suddenly need a lump sum of money -- perhaps to tackle a home repair or cover an unexpectedly large medical bill.
If you're past FRA, you can request a lump sum payment from Social Security retroactively that equals up to six months' worth of benefits. However, you can't get retroactive benefits for any month prior to FRA.
Here's what this means. Let's say you reached FRA four months ago but opted to delay your filing for a higher monthly benefit. If you decide you want retroactive benefits, you can receive up to four months of Social Security at that point. If you're six months past FRA, you can receive up to six months' worth of Social Security. If you're seven months past FRA, the most you can get is six months' worth of retroactive benefits.
Also keep in mind that collecting retroactive benefits means forgoing the equivalent amount of delayed retirement credits you accrued. So let's say you've delayed your filing for six months past FRA. Normally, that would boost your monthly Social Security benefit by 4% for life. But if you request six months of retroactive benefits, you lose that 4% boost.
It's easy enough to get confused over how Social Security works. But the more of an effort you make to educate yourself about the program, the better positioned you'll be to take full advantage of it.
