You’ll Sell Yourself Out Of Social Security If You Make These Mistakes

OWhether you plan to live primarily on Social Security in retirement or use those benefits to supplement withdrawals from your retirement plan, it’s important to get as much money out of the program as possible. But if you fall victim to these blunders, your monthly Social Security benefits could end up disappointing you.

1. Not knowing the full retirement age

You are entitled to your full monthly Social Security benefit at full retirement age, or FRA. Even if you are allowed to register for benefits from the age of 62, claiming them even a month before the FRA will result in an automatic reduction.

Image source: Getty Images.

You can assume your FRA is 65, because that’s when Medicare eligibility begins. But in fact, if you were born in 1960 or later, FRA is not before the age of 67. This is why you will need to know your FRA before you even think about filing a claim for benefits. The last thing you want to do is accidentally reduce your benefits because you don’t know when you can claim them in full.

2. Not understanding how benefits are calculated

Social Security uses a specific formula to calculate benefits, and it’s based on your lifetime earnings. If you don’t spend enough time in the workforce, you could end up with a lower lifetime benefit.

Your 35 years of best-paid salary are taken into account to establish your retirement pension. This means that if you don’t work for 35 years, you will have $0 counted in this formula for each person with no income. As such, if you’ve taken a break from your career, it could be beneficial to extend your time in the workforce at the end to prepare for a bigger upside.

3. Not realizing you can cancel an early deposit you regret

You may end up claiming Social Security before FRA, accidentally or not, and reduce your benefits accordingly. But if you recognize your mistake early on, you may be able to fix it, if you act quickly.

You are entitled to a lifetime overhaul when it comes to claiming Social Security. If you file a claim for benefits and then decide you did it too soon, you can withdraw your claim for benefits within one year and repay all the money you received. Once you’ve done those two things, you’ll have the ability to enroll in Social Security at a later age and lock in a higher benefit in the process.

What can a higher benefit do for you?

No matter how much money you bring into retirement in the form of personal savings, it’s always a good idea to get as high a Social Security benefit as possible. The advantage of Social Security is that it pays you for life, and a higher benefit could be your ticket to financial security as your retirement plan balance begins to decline.

That’s why it’s so important to avoid the mistakes above – mistakes that could leave you with a lower lifetime benefit and a world of financial stress to contend with in your old age.

The $16,728 Social Security premium that most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: a simple trick could earn you up to $16,728 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

About Robert Wright

Check Also

MGM Resorts and Others Urge FERC to Reject Incentives for NV Energy’s $2.5 Billion Greenlink Transmission Project

Diving brief: Nevada taxpayers’ attorney Public Citizen and MGM Resorts International and Caesars Enterprise Services …