Because the Social Security benefits system is more complicated than you would imagine, there’s a good possibility you’ll make mistakes that reduce the amount of money you get from your retirement payments.
There are three major mistakes you could be making right now that could lead to major financial troubles later on.
Failure To Keep Records
The Social Security Administration modifies salaries earned over time to account for salary growth before calculating your average monthly wage based on data from the 35 years when you earned the most. Your benefits are then calculated as a percentage of your typical monthly earnings.
Throughout your career, you should review your earnings record on a regular basis to ensure that all of the revenue on which you paid Social Security tax is appropriately reported. Not doing so is a mistake because it is easier to remedy problems immediately rather than decades later when documents proving how much you earned may have been lost.
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Having Unrealistic Plans
Many people intend to delay filing for Social Security as long as possible, even up to the age of 70. This appears to be a sensible approach because the longer you wait to receive your first check after being eligible for it at age 62, the greater your monthly payment will be until you reach the age of 70 when payments can no longer be increased any further.
The issue is that things may not go as planned. If your health or family obligations keep you from working, or if you are unable to find acceptable employment later in life, you may be compelled to retire early and rely on Social Security as one of your income sources sooner than intended.
If you have to claim benefits sooner than expected, you’ll be stuck with lower monthly payouts, which might devastate your retirement savings.
Build your retirement strategy on the assumption that you’ll take Social Security at a young age, and if you’re able to wait longer, just consider the extra monthly income a bonus.
Misbeliefs About Social Security
The final key mistake that many people make is believing that Social Security will do far more for them than it actually will.
Your retirement benefits are intended to be one of several sources of financial support in your senior years, alongside your savings and possibly an employer-provided pension. They cannot be your only source of assistance.
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