Social Security Mistakes That Can Cost You a Fortune

Not saving enough for retirement is one of the most common financial mistakes that people make. There’s an area where many people make mistakes without even realizing it: Social Security benefits. Since Social Security makes up fifty percent or more of the income of about half of all people who are retired, a mistake in this area can have serious consequences. It’s important to be aware of these potential mistakes and avoid them.

Social Security Mistakes That Can Cost You a Fortune

Neglecting to set up your account on the Social Security website

You get lots of great information when you register for your own account on the Social Security website. For instance, you can find out how much you’re likely to receive in benefits, you can review the SSA’s record of your income, and you can see your contributions. Not registering for an account is a mistake, because if you don’t, you leave yourself open to identity theft. If someone manages to register for your Social Security account, they may use it to take advantage of your benefits.

Forgetting to check the SSA’s record of your income

Once you register for your SSA account, you can use it to check the SSA’s record of your total income. It’s important to look at their record very closely. If they underrecord your income by even one year, it’ll affect their calculations for how much you get in Social Security payments. It’s important to keep your own record of your earnings and check the SSA’s records against them. If there are discrepancies, you should have them corrected so that you don’t get shortchanged on your benefits.

Neglecting to find out what your full retirement age is

You only get your entire Social Security benefit when you retire at what the SSA defines as your full retirement age. It used to be sixty-five for everyone. Now, however, it depends on when you were born. Your full retirement age is still sixty-five if you were born in 1937 or earlier. If you were born in or after 1960, however, you only get your full benefits starting at age 67. You should find out what your full retirement age is, and not apply to collect your Social Security payments before you have reached full retirement age.

Neglecting to delay retirement

While you can get full benefits at your full retirement age, you can get even more when you delay retirement. When you delay retirement, you increase the size of your Social Security benefit by eight percent each year, until the age of seventy. It’s important to carefully consider when to start collecting your payments. If your family members have usually lived well into their 80s or 90s, you may reasonably expect to live that long, too.

It would make sense for you to delay applying for your Social Security payments since you would collect a bigger check. If people in your family don’t live particularly long, however, beginning to collect by your full retirement age or before would make sense.

Not taking your spouse’s Social Security income into account

If you’re married, it’s important to plan with your spouse for when to apply for your Social Security benefits. It would make sense, for example, for the spouse with the lower earning record to collect at full retirement age or earlier while delaying accepting retirement payments for the higher earning spouse. This way, you will receive some income early on, and receive the highest possible income on the higher earning spouse’s Social Security later.

It’s also important to realize that should the higher earning spouse pass away first, the widow or widower can ask to receive their late spouse’s Social Security income for themselves, in place of their own. It’s important to learn about the intricacies of the Social Security system. Doing so can make a real difference to the income you receive each month.

When it comes to Social Security, be well informed so you can help maximize your benefit. It could be the difference between a comfortable retirement and an amazing one.