5 Common Social Security Mistakes To Avoid
As you approach retirement, it's important to have a solid understanding of how Social Security works and how to maximize your benefits. However, there are several common mistakes that people make when it comes to Social Security that can result in a lower benefit amount. Here are five common Social Security mistakes to avoid:
Claiming benefits too early: You can start claiming Social Security benefits as early as age 62, but if you do so, your benefits will be permanently reduced. For every year you delay claiming benefits beyond your full retirement age (FRA), your benefits will increase by a certain percentage. If you can afford to wait until age 70 to claim benefits, you'll receive the maximum benefit amount.
Not coordinating benefits with a spouse: If you're married, you may be eligible for spousal benefits based on your spouse's earnings record. If you claim spousal benefits before your FRA, your benefits will be permanently reduced. It's important to coordinate your claiming strategy with your spouse to maximize your benefits as a couple.
Not understanding the earnings test: If you claim Social Security benefits before your FRA and continue to work, your benefits may be reduced if you earn more than a certain amount. It's important to understand how the earnings test works and how it may impact your benefits.
Not checking your earnings record: Your Social Security benefits are based on your earnings history, so it's important to check your earnings record regularly to make sure it's accurate. If there are errors or omissions in your earnings record, it could result in a lower benefit amount.
Failing to consider taxes: Social Security benefits may be subject to federal income taxes, depending on your overall income level. If you don't take taxes into account when planning your retirement income, you could end up with a lower net benefit than you expected.
By avoiding these common mistakes and working with a financial advisor to develop a comprehensive retirement plan, you can maximize your Social Security benefits and enjoy a more secure retirement.