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Personal Finance

The Little-Known Rules of Social Security You Want to Know


As part of your military paycheck, you will notice that you pay into Social Security on your base pay just as civilian employees do. But when you retire, you will receive your military retired pay and as early as age 62 you can apply for your Social Security benefits.

However, claiming Social Security benefits can be strategized. To help you get the most from your benefit, here are a few things you should know that could make a big difference to your income.

1. How Your SSA Benefits Are Calculated

The Social Security Administration (SSA) bases your benefits on a 35-year average of your wages, adjusted for inflation. If you worked longer than 35 years, the government will use your highest-earning 35 years. If you worked fewer than 35 years, the government will average in zeros for the years you are lacking. If possible, you will want to work as many years as you can to avoid those “zeros” being factored into your calculation. Investopedia offers a simple explanation of how this formula works

2. When Should I Start My Social Security?

There are two schools of thought on when to start benefits — either wait until your full retirement age (FRA) which is 67 years if you where born in 1960 or later or you can start collecting at age 62, the earliest possible date. If you start collecting early, your payments will be lower since you’ll be receiving benefits for a longer time, in theory. This is why knowing your full retirement age is important. For example, if you were born in 1955, your full retirement age would be 66 years and 2 months — at that age you would be able to collect 100% of your benefits. But if you start collecting at age 62, you will get only 74.2% of the full benefit amount.

If you wait beyond your full retirement age you can delay receiving your Social Security benefit and your benefit will increase by 8% a year up to age 70. This is known as Delayed Retirement Credits. Your benefit will not increase after age 70. Therefore, you will begin receiving your benefit.

Online calculators from SSA can help you understand these variables. Additionally, if you have not already done so, creating an account on my Social Security is very important as you will be able to review your earnings record and use different tools to predict your future Social Security benefits.

It is important to know the rules and you may want to speak with a financial planner before making decisions regarding your Social Security benefits. If you decide to draw your Social Security benefits before FRA and then change your mind within one year, you will have to pay back all the Social Security benefits received within 60 days, including any spouse or child benefits.

3. Yes, You Can Still Work...

If you apply for benefits before your full retirement age, you can work and collect SSA benefits but there are limits on how much you can earn, and those limits can change each year. When you apply for benefits, the SSA will tell you the limits and whether your income will affect your benefits. More information about working after retirement can be found here.

4. Disability Payments

Qualifying Veterans can receive Social Security Disability (SSDI) benefits even if you are already receiving VA disability benefits. The amount you can receive each month will be based on your average lifetime earnings before your disability began and not the severity of your disability. More information is here.

If you became disabled while on active military service on or after October 1, 2001, it is also possible to receive expedited processing of your disability claim.

5. Claiming an Ex’s Earnings

If you’re now divorced but were married for at least 10 years and have not remarried, you can receive SSA benefits based on up to half of your ex-spouse’s earnings or based on your own earnings, whichever is higher, once you reach age 62. Your ex-spouse does not need to have started their SS benefit, provided two years have passed since the divorce. If your ex-spouse dies, you may be able to receive benefits similar to a surviving spouse (survivor draw). Visit the SSA Benefits Planner for more information.

We Can Help

If you have questions about your Social Security benefits, please contact AAFMAA Member Benefits at [email protected] or call 888-231-2766 and select option 2, then option 2 again.