Social Security Mistakes: Avoid These Costly Errors And Keep Thousands In Your Pocket

MIAMI, Florida – Navigating Social Security benefits can be more complex than many seniors expect, potentially costing them thousands of dollars. Retirement planning for millions of Americans is centered around these benefits, making it crucial to avoid common mistakes that could impact their financial security.

One of the biggest mistakes individuals make is claiming retirement benefits too early. Starting to collect benefits before reaching full retirement age can result in a significant reduction in monthly payments. The Social Security Administration imposes a financial penalty on early claimants, and a study found that waiting until age 70 to collect benefits could result in a median lifetime loss of $182,370. It’s essential for retirees to carefully consider the long-term impact of the timing of their benefit claims.

Another potential pitfall is misunderstanding the Social Security “earnings test.” This test applies if retirees start collecting benefits before reaching full retirement age and continue to work. In this scenario, the Social Security Administration withholds $1 in benefits for every $2 or $3 earned above specified annual limits. It’s crucial for individuals to understand the rules of the earnings test and how continued work can impact their monthly benefits.

Filing for both survivor and retirement benefits at the same time is a less common mistake but can still result in missing out on significant money. Widows or widowers can receive survivor benefits based on their spouses’ retirement benefits. However, filing for both types of benefits simultaneously before reaching full retirement age can lock in retirement benefits at a lower amount, impacting long-term financial security. It’s important for individuals to carefully evaluate the impact of their benefit claims on their overall financial situation.