5 Social Security Mistakes That You Probably Do not Even Realize You Make – The Fool Motley

We all make mistakes. We make non-financial products, such as making caffeinated coffee in the evenings when we want to make decaffeinated coffee, and financial products, such as not saving and investing enough to provide a treasure of war enough for retirement.

Another type of mistake that affects the comfort of our retirement is a mistake related to social security. This is dangerous, as 48% of married seniors living in Social Security and 69% of unmarried people derive 50% or more of their income from this activity, according to the Social Security Administration (SSA). ).

Here are five social security mistakes that many people make. You can do one or more without even knowing it.

# 1: Do not create a "my social security" account

If you have not yet created a "my social security" account on the SSA website, you should – for several reasons. First, you can search at any time for an estimate of your future benefits and view the history of the SSA regarding your income and taxes paid to the social security system.

It is also good to set up this account as quickly as possible, otherwise an identity thief could do it. This is one of the reasons why crooks cause huge headaches for many Americans: they pretend to be online and try to get their social security benefits.

# 2: Do not check the history of your winnings

While you are on your My Social Security account, review the history of your earnings throughout your active life and check if it looks correct. If you keep good records, you may be able to check this closely.

It is a good idea to review the file from time to time so that you can detect and correct any errors. If the registration does not reflect all your income, when the time comes to calculate (and pay!) Your benefits, you will be exchanged.

# 3: Not knowing your "full retirement age"

You should also know your "full" retirement age. It is the age at which you can start collecting all the benefits to which you are entitled. It is important to know this age, as it is likely to be a key element of any strategy developed by social security. The age of retirement was set at 65 for everyone, but it is now 66, 67 or somewhere in between:

Source: Social Security Administration.

# 4: Planning to start collecting benefits at a suboptimal time

You can make your Social Security checks bigger or smaller than you would have if you started collecting your pension at the retirement age – starting to collect sooner or later. For each year beyond the age of retirement you delay in starting to receive benefits, their value increases by about 8% – up to the age of 70. Turning 67 to 70 can leave you with checks about 24% bigger.

It works the opposite way if you start collecting early. For each year prior to the retirement age you begin to collect, your benefits will decrease by approximately 7%. So if your retirement age is 67 and you start receiving benefits at age 62, your checks will be about 30% smaller.

Many people try to wait as long as possible for the big checks, but they do not realize that even if the checks will be bigger, they will be much smaller. The program is designed so that the total benefits received are approximately the same regardless of when you start collecting, if you have an average life. Given this and the fact that not many of us know how long we will live, it makes sense that most people start collecting at age 62.

On the other hand, if your family has many people who have lived well up to 90 years and you can afford to delay the start of the collection, it may be logical to do so.

It can also be a mistake to start collecting while you are still working – or to accept a job with a high income while you are receiving benefits. Why? If you win too much, you can suspend some of your benefits. (It may be boring, but you receive that money later, so it's not a fatal mistake.) You might even end up with tax benefits.

N ° 5: No coordination with your spouse

Finally, if you are married, make sure you coordinate when you start receiving benefits with your spouse. For example, you can begin to collect spousal benefits with the lowest earnings in life, on time or earlier, while delaying the start of benefit collection for the highest-income spouse. In this way, you both touch a little earlier, and when the highest income reaches age 70, they can collect very large checks.

In addition, if the highest-paying spouse dies first, the spouse with a history of lower earnings can collect these larger benefit checks – widows and widowers who can elect to receive 100% of their spouse's late benefits instead theirs. (The survivor benefit is not available for people who remarry before the age of 60, but that is the case if you are at least 60 years old and have been married for at least 10 years. years.)

It is worthwhile to learn more about social security to make informed decisions and make the most of the program. After all, you have probably paid social security taxes (this deduction "FICA" on your pay stub) throughout your working life.