The Truths About Social Security Part I, Ep #169

Social Security can be difficult to understand. The rules can be difficult to decipher. Answers are nearly impossible to find. This leaves most people frustrated and confused. 

In this episode, I’m going to separate the truths from the many rumors you often hear and help you build your knowledge about Social Security. My goal is for you to walk away more informed about your future. Don’t miss it. 

You will want to hear this episode if you are interested in…

  • [0:34] Make sure you follow our YouTube channel!
  • [4:17] How do you earn a Social Security check?
  • [8:27] How does the spousal benefit work with credits? 
  • [11:43] How do spousal benefits work with ex-spouses? 
  • [13:26] How does the survivor benefit work? 
  • [16:04] Understanding your Social Security statement
  • [18:03] Collecting your benefits while working 
  • [19:40] How benefits are allocated monthly 
  • [20:39] What if you want to collect benefits and work? 
  • [23:21] Suspending or stopping your Social Security benefits

How do you earn a Social Security check?

I’ve heard people say, “It takes 40 quarters (10 years) worth of work to earn Social Security.” That’s not true. You can earn up to four credits per year and need at least 40 credits to earn Social Security benefits. 

Each year, the credit is assigned a different value. In 2024, it takes $1,730 of covered earnings to earn one credit toward Social Security. You don’t even have to work the whole year! 

The value of your Social Security check is based on your best 35 working years. That doesn’t mean you must have 35 years of work history. You just need enough credits to qualify. 

Social Security takes a monthly average of your highest 35 working years (inflating monthly earnings from the past to make it equivalent to today’s dollars). This is called the Averaged Indexed Monthly Earnings or AIME. They take that number and put it into a PIA formula, which gives you the amount you’d receive at full retirement age. 

How does the spousal benefit work with credits? 

Let’s say a husband and wife are 62. She’s earned 36 credits—four short of the 40-credit requirement to get her own Social Security check. However, she’s still eligible for a spousal benefit—even if she had never worked. But I still recommend she get those four remaining credits. Why?

If she has to wait for her spousal benefit at her full retirement age of 67, she’ll be eligible for 50% of her husband’s benefit. But what if he wants to wait to collect until 70? She can’t get her benefit until he collects. That’s 8 more years!

If she got those four extra credits, she could collect something before 70. Then, once he claims his benefits at 70, she could claim half of his benefit. 

How do spousal benefits work with ex-spouses? What if you had two different ex-spouses? How does the survivor benefit work? Listen to learn more!

Collecting your benefits while working

How does it work if you continue to work while collecting your benefits? Once you hit your full retirement age, you could collect your full benefit and work as much or as little as you want. That benefit will never be reduced. However, if you haven’t reached your full retirement age and you collect your Social Security benefit, there are earnings limits. 

Secondly, every January, they reevaluate your earnings from the previous year. If the previous year is one of your top 35 working years, they’ll incrementally increase your check. If it wasn’t one of your top years, it won’t have an impact on your benefits at all. 

Suspending or stopping your Social Security benefits

Once you reach full retirement age you can suspend your benefit at any time and don’t have to pay back any money. That allows your benefit to receive deferral credits. You could turn it back “on” once your benefits cap at age 70. 

If you claimed your benefit at 62 and regret claiming so young, the rules are different. You have 12 months from the time you claim your benefit to withdraw your claim. After 12 months, there’s no going back. You must continue receiving benefits. Stopping your benefits is only allowed once in your lifetime. 

Listen to the whole episode to hear the answer to more common Social Security questions!

 

Resources & People Mentioned

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Connect With Gregg Gonzalez

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