3 Social Security Mistakes to Avoid in 2019 – The Motley Fool

Social security serves as a lifeline for the millions of older people who depend on it to pay their bills. If you want to make the most of your benefits, while avoiding unwanted surprises at the moment, here are some essential mistakes you will want to avoid.

1. Not knowing your retirement age

Although your social security benefits are calculated on the basis of your annual earnings, the age at which you report them for the first time may result in a change in this number. If you want to avoid losing benefits, you will have to wait until you reach the age of retirement, or FRA, to claim them. However, this age may change depending on your year of birth.

SOURCE OF IMAGE: GETTY IMAGES.

If you were born in 1953, you will reach your FRA of 66 in 2019 and you will be able to collect all of your monthly benefits without reduction. But if you were born in 1954, you will have to wait until the next year to get all the benefits.

Do not forget that if you were born before 1958, you will be eligible for Social Security in 2019, since the earliest filing age is 62 years old. Do not forget that every time you receive benefits before FRA, you reduce them to a certain extent. In addition, since persons born after 1954 have a higher FRA rate than those born in that year or earlier, it is important to understand the consequences of filing on different dates. You can use the following table to see when you will reach FRA based on your year of birth:

DATA SOURCE: ADMINISTRATION OF SOCIAL SECURITY.

2. Do not count taxes on more of your income

Although many people view social security as a type of social assistance program, the truth is that these benefits are achieved by contributing to the system and accumulating enough lifetime work credits for the quality of income of the community. retirement. Therefore, even if you can complain that part of your net salary is lost to Social Security taxes, you must at the same time recognize that you are paying in a system that will meet your needs. you're older.

That said, the income ceiling at which social security taxes are applied increases in 2019, which means that if you earn more money, you will lose a little more money than in 2018. For the current year, the maximum taxable income for Social Security costs $ 128,400, but next year this limit will increase to $ 132,900. This means that high income will be charged to taxes on an additional income of $ 4,500.

If you are an employee, you will have to pay a 6.2% tax on this additional $ 4,500, for a total of $ 279. If you are self-employed, you will pay double that amount, for a total of $ 558. Be sure to plan this expense accordingly to avoid being caught off guard.

3. Do not fight for an increase

The more you earn during your career, the more retirement benefits you will receive. Therefore, if you do not do what you should do in your job, you will have to talk about getting a pay raise.

Of course, you should not approach this conversation blindly. Instead, do some research beforehand to understand what people are doing with your job title and see how your salary compares. If you earn well below average, it is reason enough for this data to be communicated to your boss. In addition, make a list of ways to add value to your business, whether it's maintaining specialized skills or simply going the extra mile. All these arguments are arguments in your favor, so do not hesitate to express them.

The moves you will make next year could affect the amount of money you receive from Social Security. Avoid the mistakes above and you'll be better positioned to maximize your benefits while avoiding unpleasant tax-related surprises.