One of the great things about living in America is that you don't have to rely on savings or investments alone to sustain you through your old age. There are Social Security benefits as well.
But a lot of people in their 60s don't do their research and end up making some serious Social Security mistakes. This could cost you a fortune in the long-term.
As these mistakes are avoidable, it's recommended that you speak to an estate planner or a tax lawyer about these decisions of when to retire and when to claim benefits.
Let's read further to see six Social Security mistakes that you might inadvertently be making.
1. Not Checking Your Earnings Record
The worst thing about Social Security is assuming that your earnings record is accurate and assuming that the system of records won't make any mistakes. Wrong!
A simple error of not accounting for your name change, or a digit shifted here or there, and your entire earnings record could be wrong. Check and then double-check.
2. Turning on Social Security at 62 While You Are Still Working
Social Security has strict consequences for people who are still working and collecting benefits at the same time. For every $2 you make over $17,640 (in 2019), Social Security temporarily withholds $1 in benefits.
This can add up pretty fast, and it's completely avoidable. Think long and hard before turning on your benefits if you are working. Avoid it if possible.
3. Remarrying Without Thinking About the Consequences
If you are currently collecting ex-spousal Social Security benefit, and you get remarried, your benefit will stop. It's not only about love anymore. Think about how remarrying will affect the Social Security benefits you receive.
Marriage can wait, social security will not.
4. Retiring Before You've Worked 35 Years
Even if you only need to work 10 years to get Social Security, it's recommended to work the full 35 years to get the most benefits out of the program.
Work as long as you can, because the longer you work, the higher your income is, and the more your benefits would end up being.
5. Waiting on a Spousal Benefit Until 70
Spousal benefits do not have deferral credits as the primary worker does. So it's one of the biggest Social Security mistakes to wait to collect your spousal benefit. Collect it now, and forget about deferring.
6. Not Understanding About Taxes on Benefits
There are certain levels at which Social Security becomes 50% taxable, and then 85% taxable. Plan all your retirement income sources, to ensure that you adjust for the best tax benefits for you and your spouse.
Most Social Security Mistakes Are Avoidable, So Do Your Homework and Get It Right
You have been dreaming about and planning for your retirement since you first started working. Do not ruin your precious retirement by making silly Social Security mistakes. Especially ones that are easily averted.
Check with an expert on when to claim benefits and other Social Security related questions.
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