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When it comes to Social Security, what you don’t know can cost you. Many retirees leave money on the table simply because they are unaware of certain rules built into the system.
Whether you’re nearing retirement or planning for the future, understanding these lesser-known rules could save or even earn you thousands of dollars.
Here are three little-known Social Security rules that could save you thousands.
The Do-Over Rule
One of the biggest ways retirees lose money is by claiming Social Security too early, then regretting it.
However, Social Security allows a one-time withdrawal within the first 12 months, giving claimants the opportunity to delay benefits and secure a higher future payout.
“Most people think their filing decision is set in stone,” said Yehuda Topper, CEO of Beca Life Settlements. “But for the first 12 months, you’re allowed a one-time ‘do-over.’”
Topper explained, “You withdraw the claim, repay the checks, and restart later at a higher rate. This resets your record as if you never filed, allowing your future benefit to grow up to about 8% per year for each year you delay claiming after full retirement age, up to age 70.”
This strategy isn’t just theoretical. It can make a six-figure difference.
“In terms of real-world savings, I have a friend who claimed at 62, then landed a consulting contract that eclipsed the earnings limit,” Topper said. “Twelve months later she repaid, and then filed later at 67. Her monthly check rose enough that it will net her over $100,000, assuming she lives to 85.”
The Divorce Benefit Rule
Another way people miss out is by not knowing what they’re eligible for after divorce. Many divorced retirees don’t realize they may qualify for Social Security benefits based on an ex-spouse’s work record.
This rule allows those who were married for at least 10 years, divorced for at least two, and currently unmarried to claim up to 50% of an ex-spouse’s full benefit without reducing the ex’s payout.
“If you were born before January 2, 1954, you can delay your benefits while collecting and an ex-spousal benefit,” said Lewis Landerholm, a family law and divorce attorney. “This allows your own benefit to grow up to 8% per year until at 70, ultimately increasing your lifetime payout.”
Landerholm gave the following example: Linda, 66, was married to her ex-husband Tom, 63, for 15 years before they divorced. Because she never remarried and meets the key requirements, married for at least 10 years, divorced for over two years, and Tom is over 62, she can claim up to 50% of Tom’s full benefit, or $1,500 per month instead of her own $900 benefit, even though they’ve been divorced for more than a decade.
This strategy increases Linda’s benefits by $600 per month, totaling more than $140,000 over 20 years, without affecting Tom’s benefits. In fact, Tom doesn’t even need to be collecting yet; he just needs to be eligible.
“This example showcases why it’s so important for individuals, divorcees in particular, to consult with a professional to ensure they are getting all the benefits that they are entitled to,” Landerholm said. “The rules are not always crystal clear to someone who is not familiar with all the nuances.”
The Overlooked Survivor Benefit Rule
Widows and widowers often leave money on the table by assuming they will lose benefits if they remarry. However, certain Social Security rules can actually work in their favor if they know how to use them.
Social Security rules allow surviving spouses to keep their late partner’s benefit if they remarry after age 60, while still letting their retirement benefit grow until age 70 for a higher payout.
“Surviving spouses get an overlooked break: remarriage after 60 doesn’t cancel survivor benefits,” Topper said. “So, a 62-year-old widow can keep her late partner’s benefit while delaying her own record to 70 for the maximum payout.”