These 8 Life-Changing Events Can Impact Your Social Security

Glenn Kirst is a Lead Planning Excellence Consultant at Northwestern Mutual.

One reason Social Security is so hard to plan for is this: There are so many factors that can change the amount of your benefit payment. You may be familiar with some of these factors—like how much you made while working or how old you are when you start taking your benefit—but there are others that may not be on your radar that can cause your benefit to grow or shrink.

Here are eight life-changing events that could impact your Social Security benefit.

What factors into Social Security benefits?

How much you get in Social Security depends on several factors—the most important being how much you made while you were working. The Social Security Administration (SSA) calculates your benefit amount based on your 35 highest-earning years. It then applies a formula to account for inflation to determine your primary insurance amount (PIA).

However, your PIA is not necessarily how much you’ll end up receiving. Other factors—like how much other income you’re receiving, when you start taking Social Security, and the cost of living—c an cause your benefit amount to change. And depending on other life circumstances, your eligibility and benefit amount could change, too.

What affects your Social Security check?

Once you start receiving a benefit payment, it’ll generally gradually go up as the SSA adjusts to account for inflation each year. However, there are instances in which your payment can go down—or you could become altogether ineligible to receive a payment.

Here are some life-changing events that can impact your Social Security benefit:

1. Reaching full retirement age

Reaching your full retirement age is an important milestone for Social Security, because it means you’re able to start receiving your full benefit amount. The SSA sets a full retirement age (based on your year of birth) which, as of 2024, is somewhere between age 66 and 67.

However, you are eligible to start taking benefits as early as age 62. And if you delay taking benefits past your full retirement age, you can increase your benefit amount. You’ll earn 8 percent more for every year that you delay up until age 70.

2. Getting married or divorced

In addition to individual retirement benefits, Social Security also offers spousal benefits and survivor benefits for people who are married. With spousal benefits, you could be eligible to receive up to one-half of your spouse’s primary insurance amount, which is the amount your spouse is eligible to receive at full retirement age. This applies to ex-spouses, too, if they meet the benefit criteria. If your spouse dies, you could be eligible to receive their full Social Security benefits, depending on your age and whether you’re caring for dependent children.

If you do become widowed or divorced, you’ll want to understand the rules about entering a second marriage. Depending on your age at the time you remarry, you may no longer be eligible to collect your former spouse’s benefits. On the other hand, you may be entitled to new benefits on your new spouse’s record.

3. Your spouse begins collecting Social Security

Once your spouse begins collecting Social Security, you become eligible to collect a Social Security spousal benefit. With the spousal benefit, you could be eligible to collect an amount up to one-half of your spouse’s primary insurance amount—and it doesn’t impact your spouse’s payment at all.

Make sure, though, that you understand how this amount compares to the benefit you’ll be eligible to receive on your own. You can’t take a spousal benefit and continue to grow your own benefit by delaying it. So, in some cases, waiting to claim your benefit can result in a higher payment amount than collecting a spousal benefit before full retirement age.

4. Your spouse dies

As mentioned, if your spouse passes away, you could be eligible to receive their full payment amount. But you may be eligible for more than that. The SSA pays a one-time, lump-sum death benefit payment of $255 that you’ll be able to collect. If you have dependent children under 18 (or adult children with a disability), they will also be able to receive survivor benefits on your spouse’s behalf (in addition to what you’re collecting).

5. A change in work status

Once you reach the full retirement age, you’re able to collect benefits whether you stopped working or not. However, if you’re still working, your benefit amount may be reduced depending on your income. Here are the rules in 2024:

• If you’re under the full retirement age, you can make up to $22,320 without your benefit being impacted. For every dollar you make over that, the SSA will deduct $1 from your benefits.

• In the calendar year in which you’ll reach full retirement age, you can earn up to $59,520 without your benefit being impacted. For every dollar you make over that, the SSA will deduct $1 from your benefit for every $3 you earn.

• Once you reach full retirement age, you can make any amount of money without your benefit being impacted.

So, if you’ve stopped working and you decide to go back to work, you’ll want to be mindful of how that added income will impact your benefit amount. Likewise, if you are working and collecting benefits, stopping work could increase your benefit amount if you were making above the income limit.

6. A change in income

Especially in retirement, you’ll likely have multiple sources of income—including distributions from a 401(k) or IRA, a pension or an annuity. Your income (and your filing status) will also determine whether you need to pay taxes on your Social Security benefit—and the more taxes you owe, the less of your benefit hits your pocket. The SSA has different income thresholds to determine how much of your benefit payment you’ll have to pay taxes on, but the good news is you only pay taxes on up to 85 percent of your benefit.

If you start receiving a pension, your benefit could also be reduced. In some cases, those who receive a government-issued pension may not have contributed Social Security taxes while they were working, which impacts the benefit amount.

Your Medicare premiums are also based on your income, so it’s important to understand how Medicare can impact your Social Security payments. Medicare premiums are generally offset by a subsidy called the income-related monthly adjustment amount, or IRMAA. Your IRMAA is based on the income reported on your tax return two years prior. And depending on the plan you’re enrolled in, some Medicare premium payments come out of your Social Security check. So, if two years ago you made a transaction that increased your income, your benefit payment this year could be lower because of an increase in your Medicare premiums.

7. Change of address

While moving to another state will not affect how much your benefit is, it could affect how much you’re paying in tax—changing the final amount hitting your bank account. Not all states treat Social Security the same way in terms of taxes, so before relocating, you’ll want to understand if there are any differences between where you live now and where you’re going.

If you’re leaving the country, you may still be able to continue receiving benefits as long as the country you’re moving to is eligible .

Even if you’re just moving down the road, you’ll want to make sure to keep the SSA up to date on your address to make sure there isn’t any disruption in payments or communication.

8. Change in criminal record

If you’re convicted of a criminal offense and required to do more than 30 straight days of jail time, your benefits will be put on pause until the month after you’re released.

What do to when you experience a life-changing event

If you experience any of the events above, you’ll want to make sure relevant information makes its way to the Social Security Administration. For personal changes like marital status or a change of address, you can reach out to the SSA. Most changes related to your income will be communicated to the SSA via your annual tax return.

You’ll also want to keep your financial advisor in the loop of any major life changes. When you experience a life event, chances are Social Security is not the only thing that will be impacted. As things change, your financial advisor can help you adjust your plan as needed—whether that means accounting for a smaller Social Security benefit payment or helping you decide how you’ll fund goals you set for retirement. Your advisor can also help you see impacts you may not see coming and offer solutions to protect what you’ve built.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.