3 Ways You Can Harm Your Social Security Retirement Income
By Solid Serenity Legal Solutions
The Social Security Administration reports that nearly 50% of married couples rely on Social Security for at least 50% of their retirement income. Nearly 25% of married couples depend on Social Security for at least 90% of their retirement income.
For these couples, maximizing their Social Security incomes during retirement can make the difference in having a comfortable lifestyle in retirement, or needing supplemental income from jobs or other sources. Having a plan in place now can help you avoid these 3 ways you can harm your social security retirement income when you are ready to retire.
(1) Choosing the Wrong Age to Take Your Benefits
You can choose to begin collecting your Social Security benefits as young as 62. However, if you wait until full retirement age, you can collect additional money each month on top of your benefit amount.
For people born before 1960, full retirement age starts at 66. For those born after 1960, full retirement age is 67.
Different factors will determine the right age for you to begin to withdraw your Social Security. For instance, if you withdraw benefits late and die within a decade, you will lose money. You could’ve gotten more by withdrawing earlier. But, if you live another 20 years or more, you will get more money by waiting longer to start your benefits.
On the other hand, if you have a large retirement built up in a 401k, you may want to take your benefits earlier. Then, you can retire early and meet the goals you set for your retirement.
Either way, your decision will be final. So, make sure you have thought through the pros and cons before withdrawing your Social Security.
(2) Not Having 35 Years of Work History
Your Social Security benefit amount is calculated by averaging your highest 35 years of earnings and adjusting for inflation.
If you haven’t worked for 35 years, you will have zeros in your calculation. That means your average will be significantly lower than it would be if you worked for 35 years.
Because of this, working more in your later years- where you likely have a higher income- can help elevate your benefit amount. Remember this when you make your retirement plans.
(3) Not Realizing All the Benefits You Can Claim
There are other Social Security benefits outside the standard retirement benefits. Learn what they are so that you don’t miss out on money you’re entitled to.
3 common additional benefits include spousal benefits, divorce benefits, and survivor benefits. For spousal and divorce benefits your current or ex- spouse must qualify for retirement benefits.
To receive divorce benefits, you must have been married for at least 10 years and have not remarried. If you qualify, you can receive benefits up to 50% of the amount your spouse or ex-spouse can receive at his or her full retirement age.
Survivor benefits are generally awarded to widows. But, sometimes ex-spouses, children, or other relatives can qualify.
Check with the Social Security Administration or a trusted advisor to see if these benefits apply to your situation.
If you need to get a plan in place for your family and retirement, contact us. Learn more about estate planning.