You’ll probably rely on Social Security to pay your retirement expenses to some degree. It may be a minor degree if you have a lot of money in savings and investments, or it may be a significant degree if you kick off your senior years with no pension and little money in an IRA or 401(k).
But either way, your goal should be to get the most money from Social Security you can, and avoiding these seemingly minor mistakes could be your ticket to doing just that.
1. Claiming benefits when you sign up for Medicare
You might assume that it’s a good idea to sign up for Social Security at the same time you enroll in Medicare.
And in fact, the place you’d go to sign up for Medicare is none other than the Social Security Administration’s (SSA) website.
But while Medicare eligibility begins at age 65, full retirement age for Social Security kicks in a year or two later, depending on your year of birth.
As such, if you file for Social Security right when you’re first eligible for Medicare, you’ll end up slashing your monthly benefit — for life.
2. Forgetting to file for benefits at age 70
Full retirement age is when you’re entitled to your full monthly Social Security benefit based on your personal earnings history. But you’re allowed to delay your filing past that point, and for each year you do, your benefits will increase 8%. That boost will then remain in effect for the rest of your life.
That said, you can only grow your Social Security benefits until the age of 70, so there’s no sense in delaying your filing beyond then. And if you do, in fact, wait until after your 70th birthday to sign up for benefits, you could end up losing out on money you’re entitled to.
3. Ignoring your annual earnings statements
Each year, the SSA issues workers an earnings statement that summarizes their taxable wages for the year. If you’re 60 or older, you’ll get a copy of that statement in the mail. Otherwise, you can access it on the SSA’s website.
It pays to review your earnings statement carefully each year, because mistakes that work against you could leave you with a lower retirement benefit. Say there’s a year when you earned $80,000, only for some reason, your income is listed at $0. It’s an odd thing to have happen, but it’s possible if there was a reporting error on your employer’s part (for example, your earnings may have been submitted under someone else’s Social Security number by mistake). That’s why you must check those statements for mistakes every year and correct those with the potential to reduce the amount of money Social Security ultimately pays you.
We all make mistakes in life — but these blunders could impact a substantial retirement income stream of yours. Aim to steer clear of these errors, because while they may seem innocent, they could actually end up leaving you needlessly cash-strapped during your senior years.
— Maurie Backman
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Source: The Motley Fool