3 Social Security Mistakes You Probably Don’t Even Realize You’re Making

Many of us spend little time thinking about Social Security, but that can be dangerous, since it’s likely to provide a meaningful chunk of our future income. Indeed, it provides about 30% of the income of the elderly, on average, and for 12% of elderly men and 15% of elderly women, it provides 90% or more of their income.

So aim to be at least fairly familiar with the program, so that you can make smart decisions about it and get more out of it. For starters, here are three Social Security mistakes to avoid.

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1. Not reviewing your earnings record

It’s a good idea for all of us, no matter our age, to set up a my Social Security account at the Social Security Administration (SSA) website. (Fail to do so, and there’s a chance some scammer might set up your account for you in order to collect your benefits, which can result in major headaches.) Once your account is set up, you’ll be able to pop in any time to see the latest estimates of your future benefits, based on the SSA’s records of your earnings.

Speaking of your earnings record, take some time to review it — because there can be mistakes. Be sure to have any errors fixed, lest they end up shortchanging your future benefits.

2. Expecting too much from Social Security

Another big mistake many people make is expecting too much from Social Security. It only provides about 40% of your preretirement income, on average. So for many people, it’s providing even less than that.

The average monthly Social Security retirement benefit was recently just $1,674, or about $20,000 annually. Clearly, few of us would be able to live comfortably on that. It’s true that those who earned above-average incomes during their working years will collect more than that average, but not that much more. The maximum monthly benefit was recently $4,194 (about $50,000 annually), but it’s pretty hard to achieve that payout.

So for most of us, it’s vital to be saving and investing during our working years to amass a nest egg that we can tap in retirement. For best results, develop a retirement plan to help you do that.

3. Planning to start receiving your benefits at a suboptimal time

Finally, be sure to learn enough about Social Security so you can make an informed decision regarding when to start collecting your benefits. You can start as early as age 62 and as late as age 70. Starting early will give you smaller checks but more of them. Meanwhile, delaying will result in bigger checks but fewer of them.

If you are not in great health, starting early may help you retire early — and some people simply need to start their benefits flowing early because of a job loss or other financial shortfall. If you stand a good chance of living an extra-long life and you can keep working some extra years, delaying starting to collect can make sense. Be sure to coordinate a plan with your spouse, too, if you’re married.

While Social Security may not provide all the income we’d like, what it delivers can make the difference between a retirement with financial struggles and a comfortable one. So learn enough to make smart Social Security moves.

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