3 Social Security ‘gotchas’ to avoid

by lmallernee | September 26th, 2012

The Social Security Handbook has 2,728 rules and countless interpretations—which can sometimes lead to contradictions in the system, reports Forbes.

For example:

(1) If you take your retirement benefit early and are not able to time things exactly right as to when you and your partner apply for retirement benefits, you will end up having to take your excess spousal benefit early. And if you are unable to time things right, you’ll end up after full retirement age collecting in total, less than half of your partner’s full retirement benefit.

(2) The Social Security rules are encouraging you to get divorced. If you do this at least two years before reaching full retirement age, both you and your spouse can get “free” spousal benefits. With the way the system is set up, you can continue to live together and then get remarried at 70. And if you get divorced after age 60, this will not affect your survivor benefits if one of you dies.

(3) Suppose you started receiving your retirement benefit right before you died. In this case, there is a “gotcha” for your surviving spouse. Her/his widow’s benefit will be permanently reduced because it will equal your retirement benefit with the early retirement benefit reduction applied.

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