After retiring, some Americans can receive more than a million dollars in Social Security benefits. However, not everyone knows how to make the most out of the system. Read on to see the common mistakes that many make when it comes to Social Security!
Separating Social Security And Other Assets
Social Security benefits are just as crucial as the retirement fund and investing; yet, most people forget about it. For some reason, they consider Social Security benefits not as essential as other ways of saving for retirement. Truth be told, monthly payments from Social Security become one of the most steady incomes in a retiree’s life, giving them $500,000, if not more, in their lifetime. Even though investing in an IRA or something similar is a fantastic thing to do, Americans should not neglect to learn about Social Security benefits, even if they don’t plan on retiring anytime soon! Hiring a financial advisor or visiting a local Social Security office is a fantastic start.
While you should know about the benefits of Social Security as soon as possible, make sure you don’t take that money out of the oven too early…
Taking Money Out Too Early
Of course, no one likes thinking about how much longer they have left to live. However, taking some time and truly considering the question will help you plan your Social Security benefits. In case you didn’t know, citizens can claim their social security benefits before reaching full retirement age (FRA), currently 66-years-old. However, doing so will result in a $1 deduction on every $2 they earned above the annual earnings threshold. So, unless things are incredibly dire, do not take out Social Security before 66. In fact, it’s best to wait as long as possible. Why? Well, you’ll actually make more money the longer you wait to take out Social Security.
If you start taking out benefits at 66, you’ll earn 100% of your monthly benefit. However, the longer you wait, the more your monthly benefits increase. For instance, waiting just one year, to 67, means you’ll get 108% of the monthly benefit. Waiting until 70 means you” receive 132% of the monthly benefit. Those are some significant increases!
There’s another reason to think about your life expectancy…
You Can’t Stop The Train
Many think that once you start Social Security, you can just as easily turn it off. This is not the case. If you change your mind within the first year after filing, you can repay the benefits and reset everything. However, if you miss out on that 12-month deadline, you’re out of luck. Took the money too early? That’s too bad.
Avoid these problems by carefully planning your retirement alongside your family and a financial planner. Social Security benefits are an essential part of the retirement claim, and every individual should know the system well and have a plan in place. After all, they’ll provide for you for several decades of your life – hopefully!