There's a lot you can do over the course of your life to influence how much money you'll get from Social Security. That's empowering, but it also means you can cost yourself benefits if you're not careful. Fortunately, the Social Security Administration wants to help you undo these mistakes when it can. Not all such errors are reversible, but here are three you can definitely fix — as long as you don't wait too long.
1. Income reported incorrectly
The Social Security Administration calculates your benefits based on your income during your working years — specifically, your 35 highest-earning years. It keeps track of this information in your earnings record, which you can view online — though first, you'll have to create a my Social Security account. The information about your income comes directly from the IRS every year, so it's usually pretty accurate — but not always.
For example, if you submit your Social Security number incorrectly when filling out your employment paperwork or legally change your name but fail to notify your employer, you could wind up with some or all of your income from some years missing from your earnings record. That's a problem, because the government won't consider that missing income when calculating your benefit, and you'll eventually end up with smaller checks because of it.
You can avoid this by checking your earnings record annually to make sure everything looks accurate. Don't throw away any tax documentation that proves your income for a given year until you're sure your Social Security records show the correct income figure for it. If that record is wrong, you'll need to fill out a Request for Correction of Earnings Record form and submit it to the agency, along with documents proving your real income for the year.
Though it won't be an issue for most people, high earners may notice that their earnings record doesn't match their actual income because of the cap on income subject to Social Security taxes. In 2021, you only pay Social Security taxes on the first $142,800 you make, so this is the maximum amount you can see listed in your earnings record for the year, even if you actually earn more. In prior years, the limit was lower, so that could explain why your income might not exactly line up with your earnings record.
2. Signing up too early
If you sign up to start receiving Social Security benefits before you reach your full retirement age — which is between 66 and 67 for today's workers — you'll be cutting into the size of your monthly checks. If you claim when you turn 62 — the earliest a person can — you'll only get 70% of what the government defines as your “full” monthly benefit if your FRA is 67, or 75% if your FRA is 66.
Now, it's not always a bad move to claim at a younger age. You'll get smaller monthly checks, but you'll get more of them. If you need the money to pay your bills sooner, or don't believe you'll live into your late 70s or beyond — the breakeven age at which you'll get more out of the program by waiting — you may be right to start taking Social Security early.
But if those conditions don't apply to you, and you did claim before your full retirement age, you could be short-changing yourself.
However, it is possible to withdraw your Social Security application and go back to not taking benefits for a few years — as long as it's been no more than one year since you first signed up for them. You'll also have to repay any money you've received from the program so far. This includes benefits any of your family members have received based on your work record as well, so you'll need their permission to do this.
If that's not possible, you can still suspend your benefits once you're at your FRA. This means you'll stop getting checks until you qualify for your maximum benefit at 70… unless you request that they restart them earlier. Doing this will increase your checks slightly, though they still won't be as large as they would have been if you hadn't received any Social Security benefits before 70.
3. Not claiming benefits for every eligible person in your household
You may not be the only person who can claim Social Security benefits on your work record. If you're married, your spouse will be eligible for up to 50% of your benefit at your FRA, unless they can get more by claiming based on their own work record. If you have any minor or disabled children, they may also qualify for Social Security benefits based on your work record.
The program also pays survivors benefits to the surviving family members of qualifying workers, including spouses, minor or disabled children, and sometimes ex-spouses or dependent parents. You can use the Benefit Eligibility Screening Tool to figure out which benefits (if any) each person qualifies for.
Keep in mind that some benefits, like spousal benefits, are only available to others in your family after you sign up for Social Security yourself. It may also be advantageous in some circumstances to delay claiming your benefits if you're trying to go for the largest monthly benefit possible.
If you have questions about these or any other Social Security topics, you can always contact the Social Security Administration or visit your local Social Security office. Someone there will be able to give you advice on your specific situation, and do their best to help you avoid making costly mistakes that could impact your retirement.
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