Do Your Best with Benefits

Mistakes to avoid when dealing with Social Security benefits

When it comes time to claim your Social Security checks, we want you to get the largest sum possible. If you want that too, do your best to avoid the following Social Security mistakes.

Ignoring Your Earnings Record

As USA Today reports, your Social Security earnings record provides a list of your taxable income for each working year. The higher your taxable income while you’re working, the higher your Social Security payments will be. Make sure your info is accurate at least once per year. You can check on your earnings record by creating an account on Social Security’s site. If the numbers aren’t accurate, you’ll need your tax returns to verify that. You’ll want to complete a Request for Correction of Earnings Record and then submit it, along with a tax return that displays the correct information.

Not Understanding Taxes

Unfortunately, you could owe taxes on your Social Security benefits during retirement. You don’t want that expense catching you off guard. How much you might owe depends on your combined income, your filing status and the state where you live. If your filing as an individual with a combined income of $25,000 or more, you could owe taxes on up to 50 percent of your benefits. Likewise if you’re filing as a married couple and have a combined income of $32,000 or more. To find out what you might owe in taxes, look into your state’s Social Security tax laws.

Taking Benefits Too Early

You can start taking Social Security payments as early as 62. However, it’s often wiser to wait as long as possible. That’s because the longer the wait, the bigger the check. If you wait until your full retirement age — 66 or 67, depending on when you were born — you’ll get the full benefit you’ve earned. However, if you start taking checks at 62, you’ll get just 70 percent of what you’ve earned. (And if you can wait until age 70, that’s often even better because your benefit will continue to rise.) In other words, it’s a big difference. If you really want to maximize those Social Security checks, wait past your full retirement age. Each month past your age, your checks will increase by two-thirds of one percent. Waiting isn’t easy, but it certainly does pay.

Chris O'Shea

Chris O'Shea

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