Three Less-Overt Factors Influencing Your Social Security Payments' Amount
In today's world, an alarming number of Americans rely heavily on Social Security to sustain their retirement lifestyle. According to Gallup's most recent poll, a whopping 60% of retirees rely on Social Security as their primary income source, marking the second-highest reading since the poll began in 2002. However, many individuals remain blissfully unaware of how factors like working while collecting benefits, remarriage, and Medicare premiums can impact this vital source of income.
Let's delve into the three often overlooked factors that could significantly affect your Social Security retirement benefits.
1. Working while collecting benefits
Working while getting those Social Security checks can have two potential impact on your retirement income:
a. The Social Security earnings testIf you earn income while collecting Social Security before reaching your full retirement age, the Social Security Administration (SSA) might reduce your benefits, as every $2 you earn above a certain threshold results in a $1 reduction in your annual benefits, and for every $3 earned over the threshold during the year you reach full retirement age, you get a $1 reduction. The earnings test threshold for 2025 is $23,400 before you reach full retirement age. But don't worry; your benefits will be adjusted once you've reached your full retirement age.
b. Increasing your monthly checkWhen the SSA calculates your benefits, they consider the 35 highest-earning years from your career after adjusting for inflation. If you've worked less than 35 years or earned enough to replace one of your 35 highest-earning years, you'll see an increase in your benefit when the SSA recalculates it at the beginning of the year. With a My Social Security account, you can check your adjusted earnings history online.
2. Remarrying
Divorced or widowed individuals should check how their Social Security benefits might change if they remarry.
a. Divorced spousesYou may qualify for spousal benefits based on your ex-partner's earnings record as long as you were married for ten years. Spousal benefits can be worth up to half of your ex-partner's primary insurance amount. Even if your ex hasn't claimed their benefits, you can collect your spousal benefits without their collaboration. However, if you remarry, you'll lose your eligibility for spousal benefits and will instead collect based on your new spouse's earnings record once they start receiving benefits.
b. Widow(er)sAs long as you were married for nine months prior to your spouse's passing, you're eligible for survivor benefits. Ex-spouses are also eligible if you were married for ten years. Survivor benefits provide you with a benefit equal to the deceased's primary insurance amount, which would also be your benefit if they hadn't started collecting it before their passing. If they were already receiving benefits, you could collect an amount equivalent to what they were previously receiving. However, if you remarry before reaching the age of 60, you'll lose your eligibility for survivor benefits. If you remarry after your 60th birthday, you can still apply for survivor benefits based on your former spouse's earnings record.
3. Medicare premiums
Once you turn 65, you become eligible for Medicare. If you enroll in Medicare for your health insurance while getting Social Security benefits, the SSA will automatically deduct Medicare Part B premiums from your monthly check.
However, Medicare premiums and Social Security COLAs don't synchronize. For example, in 2025, Social Security's COLA was 2.5%, raising the total monthly benefit by $48. Meanwhile, Medicare Part B premiums increased by at least $10.30 to $185, a 5.9% increase. It may seem like you're not getting the full COLA but instead, your healthcare expenses have risen faster.
Keeping track of how Medicare premiums and the overall cost of healthcare impact our finances is essential when managing our Social Security benefits and retirement budgets.
- To effectively manage your retirement finances, it's crucial to consider how working past your full retirement age could affect your Social Security benefits, specifically the Social Security earnings test, which could result in a reduction in your benefits if you earn above a certain threshold.
- Remarriage can also impact your Social Security retirement benefits. For instance, divorced individuals might be eligible for spousal benefits based on their ex-partner's earnings record, but remarrying would result in losing this eligibility and shifting to their new spouse's earnings record for benefits.
