For most Americans, social security retirement benefits typically represent 30 to 60% of their retirement income. Yet according to the National Social Security Association, LLC, over 90% of social security recipients receive less money than they are entitled to receive. For many filers, this can represent tens of thousands of dollars in lost retirement benefits.

These results are not surprising when you consider the sheer complexity of the social security system. There are over 2,700 rules that govern social security! Agents at the Social Security Administration (SSA) are also prohibited from providing advice on filing strategies or on the taxation of benefits, and not all of them are aware of the 2,700 rules.

The SSA website does provide valuable information but the filing rules can be extremely complex and confusing. For example, a typical married couple has over 567 possible ways to file for their benefits. If you are divorced or widowed, the filing rules can be even more complex. If that wasn’t enough, Social Security introduced a number of “new rules” as a result of the Bipartisan Budget Act of 2015. Given these new rules and the already high level of complexity, how can you be sure you are not leaving eligible benefits on the table? 

Here are 10 things you should know before filing for benefits.

Deferring benefits to age 70:  By delaying receipt of benefits from age 62 to 70, you will increase your retirement income payment by 76% plus any cost of living adjustments (COLA). If Social Security COLA reaches its 20 year average of 2.5%, then your eligible benefit amount at age 70 would be almost double the amount at age 62.

“The Do Over”:  If you have already filed for benefits and wish to undo your election, you can do so up to 12 months from the date you filed. You will need to pay back any benefits received but it will allow you to elect an alternate filing election in the future, which might provide you with increased future benefits. Please note, however, that you can only do one “do over” in your lifetime.

“Start-Stop-Start”:  If you filed for benefits prior to full retirement age and later on decide to defer your social security income benefits, what are your options? Once you reach full retirement age (FRA), typically age 66, you can suspend your benefits up to age 70. This will allow your benefits to increase by 8% per year (called “delayed retirement credits” or DRCs) plus any COLA. This will result in a 32% increase in benefits from ages 66 to 70 plus COLA.

Increasing Benefits While Receiving Benefits:  Your benefits are based on your highest 35 years of averaged indexed monthly earnings. If you continue to work while receiving benefits, and your earnings are higher than any of the previous 35 years of indexed earnings, your benefits will be re-calculated to reflect your higher current earnings.

“File and Suspend”:  This filing strategy permitted you to elect to file for your benefits once you reached FRA but then immediately suspend them up to age 70. This would allow your benefits to grow by 8% per year plus COLA to age 70. Because you have technically “filed” for benefits (although without receiving them), your spouse would then be eligible to file for spousal benefits at his or her FRA and defer his or her own benefit to age 70 in order to maximize his or her own benefit as well. Under the new rules, however, file-and-suspend was eliminated. You had to be at least age 66 as of May 1, 2016, and you had to actually “file and suspend” by then in order to qualify. 

“File and Restrict”:  If your spouse had filed for his or her benefits (and you had reached FRA), you could “restrict your benefit to a spousal benefit” and collect 50% of his or her benefit amount. Then you could defer taking your own benefit until age 70 in order to earn DRCs plus COLA on your benefits. At age 70, you would switch to your now much higher benefits. This strategy will not reduce any benefits that your spouse is receiving. Under the new rules, however, this filing strategy is being phased out.  You had to be between ages 62 to 70 by Jan. 2, 2016, in order to be eligible to file a restricted application for spousal benefits.

Spousal Benefits:  If you get married, you are eligible for spousal benefits once you have been married for at least one year. At FRA, spousal benefits are equal to 50% of your spouse’s FRA benefit. The earliest you could potentially start to receive spousal benefits is age 62. Prior to FRA, however, the deemed filing rule comes into play and might require that you elect your own reduced benefit versus your spousal benefit. Under the new rules, the deemed filing rule has been extended to age 70. This means that if your own benefit at FRA is more than 50% of your spouse’s FRA benefit amount, you have to take the higher of the two benefits. If, however, you were 62 or older by Jan. 2, 2016, then you are grandfathered in under the old rules.

Survivor Benefits:  Once you have been married for at least nine months, you will be eligible for survivor benefits. Once you and your spouse reach FRA, survivor benefits will be 100% of the deceased spouse’s benefit amount, including any DRCs. Survivor benefits are available as early as age 60 (or 50 if you are disabled) at a reduced amount. For example, at age 60, the survivor benefit is equal to 71.5% of your deceased spouse’s FRA benefit. Under the new rules, there were no changes to survivor benefits.

Divorced Spouse Benefits:  If you were married for 10 years or longer, divorced for at least 2 years, not re-married, and you and your ex-spouse are at least age 62, then you will be eligible for ex-spousal benefits, which are similar to benefits you would have received if you were still married. Collecting benefits off of an ex-spouse will not affect his or her benefits, nor will it affect any benefits of his or her new spouse if she or he has remarried.  Under the new rules, however, you had to be age 62 or older by Jan. 2, 2016, in order to file a restricted application for ex-spousal benefits.

Remarried Widow:  If you are a widow and then remarry, you will no longer be eligible to collect survivor benefits off of your former deceased spouse. If, however, you remarry after age 60 and your former spouse dies, you are still eligible to collect survivor benefits off of your deceased former spouse.

Clearly, the rules governing social security income maximization planning are quite complex. In addition to the numerous rules and filing options, your optimal Social Security filing strategy should also take into account your health status, life expectancy, need for income, how long you plan to work, and survivor needs. All of these factors should be considered in order to determine your optimal filing strategy.

Your social security filing election is essentially a pension election. Furthermore, it might be one of the most important financial decisions you make in planning for retirement. Coordinating this valuable benefit along with your other retirement assets in a tax-efficient manner is critical to develop a financially sound retirement income plan. If you are approaching retirement, perhaps now is the time to take a closer look at all of your available Social Security filing options to ensure that you maximize your eligible benefits and don’t end up leaving money on the table.

Ash Ahluwalia, MBA, CFP, is the founder and president of National Social Security Partners, LLC, (“NSSP”), the nation’s leading social security planning firm. NSSP works in collaboration with other professionals such as financial advisors, CPAs, and attorneys to help clients navigate the complexities of social security and maximize benefits.  Ash received the “National Social Security Advisor of the Year” award in 2016 from the National Social Security Association. He has built a significant practice advising clients on how to maximize their eligible Social Security retirement benefits. He is one of only a few advisors in the nation who has obtained both the Certified in Social Security Claiming Strategies (CSSCS) designation and the National Social Security Advisor (NSSA) designation.  Please visit Ash's website at www.nsspartners.com or contact him at (973) 202-1212.