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Navigating Social Security can be like walking through a financial maze, where one wrong turn could cost you dearly. As you approach or enjoy your retirement years, it’s crucial to be aware of the pitfalls that can affect your benefits. In this article, we’ll uncover 15 common Social Security mistakes that retirees and future retirees often make, mistakes that could significantly impact your financial security. From timing errors to misunderstanding spousal benefits, let’s ensure you’re equipped with the knowledge to avoid these costly blunders.
Ignoring Timing of Benefits
Claiming Social Security too early or too late can affect your lifetime earnings. Understand the implications of your timing to maximize benefits.
Overlooking Tax Liabilities
Many retirees don’t realize that Social Security benefits can be taxable. Failing to account for taxes can lead to unexpected financial strain.
Misunderstanding Spousal Benefits
Not fully understanding spousal benefits can result in lost income. Know how and when your spouse’s benefits can impact your retirement plan.
Not Working Enough Qualifying Years
Your benefits are calculated based on your 35 highest-earning years. Working less can significantly lower your benefit amount.
Assuming you won’t live long can lead to early claiming. With increasing life expectancies, it’s wise to plan for a longer retirement.
Ignoring Earnings Limits
If you work while receiving benefits before full retirement age, there are limits to how much you can earn without reducing your benefits.
Not Checking Your Earnings Record
Inaccuracies in your Social Security earnings record can impact your benefits. Regularly check your record for any errors.
Failing to Coordinate with Your Spouse
Couples should coordinate when and how they claim benefits to optimize their total income.
Disregarding Survivor Benefits
Understand how survivor benefits work, especially if you are the higher earner in your household, to protect your spouse financially.
Overlooking Disability Benefits
If you become disabled before retirement age, you may be eligible for benefits. Ignoring this can mean missing out on crucial income.
Not Considering the Impact of Divorce
Divorce can affect your benefits, particularly if you were married for 10 years or more. Know your rights to claim on your ex-spouse’s record.
Forgetting to Update Beneficiary Information
Keep your beneficiary information up to date to ensure the right people receive survivor benefits in the event of your death.
Claiming Benefits While Living Overseas
Living abroad can come with specific rules and restrictions for receiving Social Security. Be aware of these if you plan to live outside the U.S.
Ignoring Annual Earnings Statements
Not reviewing your annual Social Security statements can mean overlooking potential issues or planning inaccuracies.
Not Seeking Professional Advice
Navigating Social Security can be complex. Seeking advice from a financial professional can help you make informed decisions.