Take advantage of these Social Security loopholes to increase your benefits
Social Security is a large program that serves as a lifeline for millions of people. The program has several rules to ensure it is fair for everyone. But because of its size, the program still has some loopholes that beneficiaries can use to increase their benefits. In this article, we’ll talk about Social Security loopholes that are still available.
brief history
Before 2015, there were many well-known Social Security loopholes that people could take advantage of, but the Bipartisan Budget Act of 2015 closed nearly all of them. The 2015 bill was considered a substantial adjustment to the Social Security program.
Over time, SSA adopted several modifications to make the program more fair and equitable. However, the phase-in is still ongoing, which means some people may still be eligible to take advantage of Social Security loopholes to increase their overall benefit amount.
The two most popular loopholes that are currently addressed are File and Suspend and Limited Filing.
limited submissions
It is a well-known fact that delaying claiming your pension until age 70 increases your monthly retirement benefit. To make the most of this, married people can take advantage of limited applications to begin receiving spousal benefits at their full retirement age (FRA), but their benefits will grow.
They were able to accomplish this by submitting a limited application, which allowed them to select the benefits they were applying for at the time they submitted them. This option was available to people born before 1953 (and whose other spouse was born in 1958 or earlier).
This loophole has essentially been closed because anyone born before 1953 is now already 70 years old, and Social Security benefits cannot be deferred past age 70.
Files and Suspend
Before 2016, a Social Security loophole allowed married people to voluntarily stop receiving benefits after reaching FRA. Allows a spouse to continue receiving spousal benefits even if the individual stops receiving his or her own benefits. This way, a couple can receive just one Social Security check and increase their other benefits.
However, SSA closed the loophole by allowing spousal benefits only if the worker’s spouse was receiving retirement benefits. You can also use the file and pause strategy now, but it’s important to note that pausing your benefits will also pause your spousal benefits. The law change does not apply to people receiving divorced spousal benefits.
Social Security loopholes that are still available include:
You can receive benefits even if you have never worked.
Social Security is based on the premise that you contribute while you work, and then Social Security takes care of you when you retire. But one loophole allows you to receive all the benefits even if you’ve never worked a day in your life. This loophole has to do with spousal benefits.
If you are married to someone who qualifies for benefits, you can receive up to 50% of your spouse’s benefits, even if you are not eligible for benefits based on your own work history.
On the other hand, you can still claim spousal benefits even if you qualify for benefits based on your own work history. In such cases, you may use your own work record benefit or your spouse’s benefit, whichever is higher.
Ex-spouse can also receive benefits
Even if you are divorced and do not qualify for benefits based on your work record, you may be able to receive benefits based on your ex-spouse’s work record.
However, in order to receive divorce benefits, you must meet several conditions. Divorce benefits are only available if you were married for more than 10 years before divorce. Additionally, you must be single and at least 62 years old to claim divorce benefits.
You may receive higher benefits if your spouse dies.
For spousal benefits, you can receive up to 50% of your spouse’s benefit. However, if your spouse dies, you may be entitled to survivor benefits of up to 100% of the deceased beneficiary’s benefit.
You can receive 100% of your deceased spouse’s benefit only if you reach full retirement age. If you are over age 60 but under full retirement age, you may be eligible to receive between 71½% and 99% of your deceased spouse’s benefit. Additionally, if you are 50 to 59 years old and disabled, you can receive 71½ percent, and if you are caring for a child under 16, you can receive 75 percent, regardless of age.
Survivor benefits are also available to surviving and dependent parents. For example, a dependent parent of a deceased worker may receive between 75% and 82.5% of the primary beneficiary’s benefits. Likewise, children under the age of 18 (or under 19 if still in elementary or secondary school) may also receive survivor benefits.
You can avoid deductions even if you work and receive benefits
Normally people claim Social Security after retirement, but the Social Security Administration (SSA) allows you to work and receive benefits.
But in this case, SSA will deduct $1 from your benefits for every $2 you earn over the annual limit once you reach full retirement age. In the year you reach FRA, SSA deducts $1 for every $3 you earn over the threshold. The threshold limit changes every year. Beneficiaries can avoid this deduction by ensuring that their income does not exceed the standard limits. Once you reach full retirement age, SSA will not deduct anything from your benefits even if you continue to work.
