6 common Social Security mistakes to avoid them

6 common Social Security mistakes to avoid them

Social Security's rules can be more complicated than you might think. The difficulties in understanding the inner workings of the retirement benefits program can lead to mistakes that can be made without even realizing it. If you are a retiree, you may have to pay some of the financial security you deserve.

To ensure you don't accidentally make a costly mistake, here are some common mistakes you may not even know you're making and some tips on how to avoid them.

One of the biggest mistakes people make - and don't realize they're making - is not knowing their break-even age before they decide when to claim benefits.

Each month you delay the commencement of your retirement benefits, the amount you receive increases but you pass up an entire monthly check.

To calculate your break-even age for your payments, you'll need to calculate your break-even age based on the time frames you're considering for claiming benefits. How long would it take to make up for the missed income for your higher future benefit? It would take 140 months for the extra $480 because of the delayed benefit to make up for the $67,200 you'd miss as a result of waiting until 67 to claim benefits instead of starting them at 62.

If you know you'll live another 140 months after turning 67, delaying your benefits claim would make sense.

If you're considering claiming ages, you should always calculate your break-even point for any claiming ages you're considering because otherwise, you're not being as strategic as you can be about maximizing lifetime benefits.

To maximize your benefits, you can't work too many years to maximize your benefit.

One of the biggest mistakes many people make is not working long enough to maximize their benefits. Your benefits are calculated based on inflation-adjusted wages from your 35 highest-earning years.

If you are employed for less than 35 years, your benefit will be lower because the calculation will include years of $0 wages. If you work exactly 35 years, every single year you work will be factored in the calculation, including those years when you may not have made much since your career was just taking off or if you were unemployed for part of the year.

If you are earning more than at any point before, you can maximize your benefit by working an extra year or two for a higher salary and replacing lower-earning years in your benefits calculations.

not coordinating with your spouse to decide on a claiming strategy

Finally, married couples need to work together to determine a strategy to obtain the most combined Social Security income and make sure that the surviving spouse is protected financially.

If there's an earning disparity, it makes sense for the lower earner to claim their benefits first, so the higher earner can delay and increase their bigger benefit over time. This can also maximize survivor benefits too, as the person left behind has to keep the larger of the two Social Security checks after their partner passes.

By avoiding these mistakes, you can get the most out of Social Security and, in turn, your retirement. Even a few dollars can make a difference when the paychecks stop coming in.