Understanding how to avoid the most common social security mistakes is essential in helping you save money. Many of these mistakes can easily be avoided and help you maximize your return regarding Social Security benefits. Taking the time to learn the various rules and regulations is always a great idea to avoid common mistakes.
Here are a few simple tips to keep in mind that will help you avoid common errors with receiving Social Security benefits.
#1 Not Reviewing Your Earnings Record
Your Social Security earnings are based on your taxable income for every year that you worked. Higher earnings result in a bigger Social Security check. However, it is always a good idea to check your earnings record at least once a year to ensure that it is accurate. If you notice any mistakes, you can fill out a Request for Correction of Earnings Record while also including documentation to verify your income.
#2 Not Understanding When to Start Benefits
Everyone knows that you can begin earning Social Security at the age of 62. However, many people fail to realize that receiving Social Security at this age actually reduces your monthly check. If you wait for longer, you can receive your full benefits by receiving Social Security at your full retirement age (FRA). Usually, this is either 66 or 67 years old, depending on your birth year. The longer you wait until your FRA the more it will result in receiving more Social Security benefits.
#3 Failing to Understand How Social Security is Taxed
You may owe taxes on your Social Security benefits during retirement. Planning for these taxes beforehand is essential in avoiding any unpleasant surprises. The amount of taxes that you owe depends on your combined income and your adjusted gross income while also including nontaxable interest and half of your Social Security benefits.
Understanding the various rules and regulations of Social Security benefits is essential in maximizing your return and avoiding additional costs. Always reviewing your past earnings, understanding the best time to start receiving your benefits, and reviewing tax regulations are all key steps in helping you avoid common mistakes. Learning how the program works will allow you to receive more money and is well worth the extra effort.
Securities offered through Sanctuary Securities, Member FINRA and SIPC. Advisory services offered through Sanctuary Advisors, LLC, an SEC-registered investment advisor