Social Security remains one of the most valuable retirement resources available to Americans, with many middle-income couples receiving over $1.4 million in benefits during a 20-year retirement. Unfortunately, many retirees can easily leave thousands of dollars in eligible benefits unclaimed due to the program's complexity.
In our previous blog, we covered five important Social Security filing strategies.Now, let's explore five additional strategies that could help you uncover hidden wealth in your Social Security benefits and make more informed decisions about your retirement income.
1. The Grace Year Rule: A Special First-Year Exception
If you file for Social Security between age 62 and your full retirement age (FRA), you're subject to the earnings test, which reduces benefits if you earn above certain thresholds ($23,400 in 2025). However, there's an important exception in your first year of filing called the Grace Year Rule.
For example, if you turn 62 in January 2025, work until June earning $100,000, then retire with no additional earned income for the remainder of the year, you can file for benefits starting July 1 without being penalized by the annual earnings limit. Instead, you'll switch to a monthly limit of $1,950 (1/12 of the annual limit).
This rule allows new retirees who stop working mid-year to begin collecting benefits immediately rather than waiting until the following January, helping you uncover benefits you might otherwise miss.
2. Ex-Spousal Benefits: Protection After Divorce
Many divorcees don't realize they may be entitled to benefits based on their ex-spouse's earnings record. To qualify for ex-spousal benefits, you must meet four criteria:
- Your marriage lasted at least 10 years
- You are currently unmarried
- Both you and your ex-spouse are at least 62
- You've been divorced for at least two years (unless your ex is already collecting benefits)
Similar to traditional spousal benefits, if your benefit at FRA is less than half of your ex-spouse's benefit at FRA, you're entitled to the higher amount to equal half. For example, if your ex-spouse's FRA benefit is $3,000 and yours is $1,000, you could receive $1,500 total.
The best part? Your ex-spouse doesn't need to know you're claiming on their record, and their own benefits won't be affected. Even if they remarry, you can still claim ex-spousal benefits as long as you remain unmarried.
3. Child Benefits: Support for Families with Young Children
If you're collecting Social Security benefits and have dependent children under 18 (or 19 if they’re still in high school), your children may be eligible to receive up to 50% of your full retirement age benefit amount—even if you filed early.
For example, if your FRA benefit would be $3,000 but you took early retirement at 62 receiving $2,250, your eligible child would still receive $1,500 per month (50% of your FRA amount) until they reach 18 (or 19 if still in high school).
For families with multiple eligible children, each child can receive benefits, though the total family benefits are capped by the "family maximum" (typically 150-180% of the parent's FRA benefit).
4. Child-in-Care Benefits: Additional Support for Caregivers
Here's a strategy many families miss: If one spouse is collecting Social Security benefits, has a child under 16, and the other spouse isn't yet collecting their own benefit, that second spouse may be eligible for a "child-in-care" benefit.
This benefit equals 50% of the collecting spouse's FRA benefit and continues until the child turns 16. For example, if you're collecting $3,000 monthly at your FRA and your spouse earns less than the earnings test limit, they could receive $1,500 monthly while caring for your under-16 child. Meanwhile, your child could also collect a child benefit until age 18 (or 19 if still in high school).
Keep in mind that the family maximum may reduce the total benefits if both child and child-in-care benefits are being paid simultaneously.
5. Ex-Spousal Survivor Benefits: Protection Even After Divorce
If your ex-spouse passes away, you may be entitled to survivor benefits equal to 100% of their benefit amount if:
- You meet all the criteria for ex-spousal benefits listed earlier
- You haven't remarried before age 60
The remarkable aspect of this benefit is that even if you did remarry after age 60, you'd still be eligible for the ex-spousal survivor benefit. Additionally, if your ex-spouse remarried before passing away, both you and their widow/widower can receive the full survivor benefit—you don't have to split it.
Start Optimizing Your Social Security Benefits
The complexity of Social Security rules—over 2,700 of them—means there's rarely a one-size-fits-all solution. Your optimal filing strategy will depend on your unique situation, including your health, other income sources, and family circumstances.
Want to explore how these strategies apply to your specific situation? Contact us for a complimentary consultation to help you get your whole financial house in order.
Securities and investment advisory services offered through M Holding Securities, Inc., A Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Financial planning and investment advisory services offered through Prosperity Capital Advisors (PCA), a SEC registered investment advisor. For more information, visit www.adviserinfo.sec.gov. OneTeam Financial LLC is independently owned and operated.