2021 has been a challenging year. We’ve had to overcome a lot to get here, but we kept moving forward. With all the hurdles we’ve overcome, don’t let simple errors keep you from living your best life. Especially with something as important as Social Security, tiny mistakes can leave you with less benefits than you deserve. Luckily, 2021’s biggest Social Security mistakes are simple enough to avoid if you know how to spot them before they become a problem.
In an article shared by Forbes.com, financial planner David Rae outlines the five biggest mistakes people accidentally make when applying for their benefits. The first mistake is claiming your benefits too early. You can legally claim your Social Security at age 62 but waiting till your 70 can raise your payout by 76%. Waiting those years also provides the opportunity for cost-of-living adjustments (COLA) to increase Social Security benefits further. You don’t have to wait till you’re 70 but the longer you can put it off the better. In addition, Rae goes on to talk about how it can hurt your benefits to claim Social Security before full retirement age if you continue to work during that time. The government will cut your benefits back until you reach full retirement.
Other mistakes include not claiming the maximum survivor benefit or getting remarried before you reach retirement age. Rae finds a loophole where you can claim your Social Security or your Survivor benefit early and let the other appreciate until you reach full retirement age. Depending on which on has the higher payout you would take the smaller one first and switch to the higher one in time. If you get remarried, be aware that your spousal benefits get replaced with that from your new marriage, which can increase or decrease in size depending on the situation.
Finally, Rae concludes that it isn’t wise to ignore Social Security taxation. Social Security is taxed based off wages and income. It’s important to know what you’re getting taxed and what to expect from your benefits when they eventually come. The Council for Retirement Security fights against loopholes like the Carried Interest and the Payroll Tax Cap loopholes that help the private sector avoid paying into the Social Security Trust. In addition, the Social Security Lock-Box Petition seeks to protect the Social Security trust from greedy governmental hands. Together, these initiatives will help fund Social Security so that you can worry about maximizing your benefit, and not about whether the money is even there.