The Three Biggest Social Security Mistakes I See
Because I work a lot with Social Security you might imagine how agitated I was when The Office of Inspector General released a report in March showing that 9,224 Social Security recipients were underpaid approximately $131.8 million according to CNBC.
The research found that claimants were not informed that they had the ability to take widow or widower’s benefits while delaying their own retirement benefits, which would allow those checks to increase. Bad Social Security advice is all too common. You don’t want to get this wrong.
The Three Biggest Social Security Mistakes I See
In addition to problems for widow and widowers, there are three other major mistakes that you don’t want to make when you file for Social Security. The good news is that they are all easy to avoid with a little preplanning.
- Relying on the government to give you the right answers
Many don’t realize that the folks at Social Security are forbidden from giving you advice. They are only allowed to give you facts. They are not allowed to make suggestions, discuss various strategies or do what’s in your best interest. They are only allowed to take your claim and assist in filing for benefits. Because of this far too many retirees leave hundreds of thousands of dollars of Social Security income out of their retirement years. Every day I have at least one conversation about how to get what you’re due and maximize your benefits.
- Taking Social Security too early
Something happens to folks when they turn 62 and realize there’s a possibility of ‘free’ money waiting for them. About 75% of all Social Security claims are made at 62. For most this is far too early. Generally it should always be avoided. Even 66 or 67 can be too early. Because Social Security calls it Full Retirement Age doesn’t mean it’s the optimal time for you to apply.
Not only are there multiple Social Security strategies to consider your individual circumstances such as age, income, longevity, investments, spousal options, pensions and others come into play. You should know the result of every strategy before you file. This decision will affect the rest of your retirement.
- Not understanding the power of spousal benefits
Too many married couples both file at 62 or at Full Retirement Age. Social Security has provided a number of options for married couples. If you don’t know the one that is right for you and your spouse Social Security will surely not offer it to you. There are 567 different claiming strategies with Social Security. Many of these involve spousal benefits. What’s the chance you’ll possibly pick the right one?
Using the right spousal strategy can lead to potentially thousands of dollars more in your retirement years. I’ve never had a client complain that their retirement had a few extra dollars than they expected.
How To Get The Maximum Benefit
These are just the top three of many mistakes I see. There are more.
Getting the maximum benefit is not hard. Here are the steps.
- Get help from an advisor that understands Social Security.
- Consider your longevity and understand your options based on how long you may live.
- Be sure to review the different options for divorces, widows and widowers.
- Consider your retirement savings (IRA, 401k, Roth, Annuity, Pension, etc.) and how they coordinate with Social Security. Each of these is potentially taxed differently and should be integrated with your Social Security strategy.
Everyone deserves to know their options and understand their best strategy.
If we can help you or someone facing the Social Security challenge let us know.
