It is easy to make Social Security mistakes.
Planning financially for retirement can feel overwhelming.
You have been saving for years, but you know every little bit helps.
Although Social Security will be insufficient to cover all of your expenses, it can supplement your savings.
According to a recent Fox News article titled “These mistakes will take a huge bite out of your Social Security income,” many individuals do not maximize their Social Security benefits.
How does this happen?
They do not work a full 35 years.
People do not all receive the same Social Security benefit amount.
Rather, this benefit is calculated based on what you earned in your 35 highest-paid years of employment.
What happens if you do not work at least 35 years?
Each year you do not work is counted as $0.
No income for one or more years reduces your monthly benefit.
Is there a workaround?
Yes, you can increase this by working at least 35 years.
Typically, folks earn more money the longer they are in the workforce.
For this reason, delaying retirement could be a good idea.
They file for benefits before full retirement age.
Although you can file for Social Security before your full retirement age, you will not be eligible to receive your entire benefit.
When is full retirement age?
This depends on when you were born.
Were you born in 1960 or later?
Your full retirement age is 67.
Were you born in 1959 or earlier?
Your full retirement age is 66 or 66 plus a few months.
Anyone can file for Social Security as early age 62.
Before doing so, you should know this will reduce your benefit permanently based on each month you sign up before your full retirement age.
They delay benefits beyond age 70.
Delaying benefits passed full retirement age can help you increase your monthly benefit by 8 percent a year until age 70.
After age 70, the accruing ends.
You should begin taking benefits at age 70 because there is no longer an incentive to delay.
If you wait, you simply miss out on income.
They retire in a state that taxes benefits.
If your earnings are high enough, your Social Security may be taxed by the federal government.
Not all states tax Social Security benefits.
Thirteen states do levy some type of tax on Social Security income.
Both Kansas and Missouri are currently on this list.
If you are nearing retirement, you should review these common mistakes and your financial planning to maximize your Social Security income.
Reference: Fox News (Sep. 14, 2020) “These mistakes will take a huge bite out of your Social Security income’