Want to collect your past Social Security benefits? A little-known rule may make it possible.
Think tank proposes capping Social Security benefits at $100,000
A Washington think tank has proposed capping annual Social Security benefits for married couples at $100,000 as a way to reduce a looming deficit in retirement trust funds.
When you claim Social Security, you can decide when your benefits start.
Most people will start receiving their checks after they file their claim. But there’s actually a strange Social Security rule that allows you to receive benefits retroactively. These are the benefits for you It was done I had collected them in the past, but I hadn’t.
However, not everyone can take advantage of this rule. Here’s what you need to know to qualify.
Retirees can receive up to six months of retroactive benefits.
Many people don’t realize it, but it’s actually possible to receive a Social Security check for a period of time before you can claim it. You can do this by choosing to start receiving benefits, as the Social Security Administration explains. in front The month in which you actually applied.
For example, if you apply for Social Security in August, you don’t need to set a date in the future, such as after September, for your first check to arrive. Instead, you can choose to start paying Social Security good Before August. That way, you can receive benefits retroactively.
However, this also has its limits. The Social Security Administration says it will pay benefits retroactively. only After reaching full retirement age (age 67 if born after 1960). In other words, if you had made such a claim in August, just Once you reach your FRA, you cannot receive benefits retroactively.
The Social Security Administration also pays retroactive benefits. only Up to the past 6 months. Therefore, if you made a claim in August, you can claim retroactive benefits going back to February, but you cannot claim for January or December of the previous year.
Why is retroactive benefit necessary?
while you are there can There’s no point in claiming retroactive Social Security benefits to receive a few months worth of retirement benefits. everyone To do this:
If you wait to claim benefits beyond your FRA, you can earn delayed retirement credits. These increase your benefits by 2/3 of 1% per month. If you claim benefits retroactively, you’ll lose some or all of the credits you earned by waiting until your FRA ends.
If you wait for your check to start and earn six months of delayed retirement credits, and then claim retroactively in February, that retroactive claim means you forgo six months of credits and avoid having your monthly payments increase by about 4%. This 4% increase means you’ll receive a higher check for the rest of your life.
Nevertheless, retroactive claims may still be made. May Makes sense. For example, if you face a large unexpected expense and don’t want to withdraw large sums of money from your retirement plan, you may decide it makes sense to retroactively claim your Social Security benefits and get a few thousand dollars to pay for your expenses.
Calculate what your retroactive payments will be to fully understand the impact of your decision. and How will this choice affect future income? Taking the time to learn the ins and outs of Social Security, including its strange rules, can help you supplement your investments and get the secure retirement you deserve.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
