Don’t Let 2022 End Without Making These 2 Social Security Moves

There are only a couple weeks left of 2022, and you may already be making plans for 2023. But before you delve too deeply into that, it’s a good idea to conduct a year-end financial review. This helps you see how much progress you’ve made toward your goals during the year and set new goals for 2023.

It’s a good idea to add the following two Social Security moves to your year-end review even if you’re not old enough to claim yet. Taking these steps now will make things a lot smoother for you when you are ready to apply.

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1. Review your earnings record

Your earnings record is what the Social Security Administration bases your benefit on. This keeps track of how much money you’ve paid Social Security payroll taxes on over the years. Errors here are uncommon, but they can happen if you change your name and fail to notify your employer or if you or your employer make an error on your tax paperwork.

The most devastating errors may cause your earnings record to show no earnings for a year you know you worked. That could permanently shrink your Social Security benefit if it’s not corrected. So it’s often best to tackle these problems as soon as they arise.

You can view your earnings record by creating a my Social Security account. You’ll need to answer some identity verification questions when you first set up your account. In the future, you’ll be able to log in with a username and password. Once you’re in, locate your earnings record and compare the annual incomes shown here against your personal records.

If you spot an error, fill out a Request for Correction of Earnings Record form and submit it, along with any tax documentation you have showing your real income, to the Social Security Administration. It will review the information you send and update your earnings record if necessary.

One important note for high earners: It’s possible your earnings record may correctly show a different amount than your actual income for the year. That’s because you may not pay Social Security taxes on all you’ve earned. For example, in 2021, you only paid Social Security taxes on the first $142,800 you made.

So even if you earned $1 million, your earnings record would only show $142,800 for that year. That’s not a mistake and you don’t need to notify the Social Security Administration. Here’s a list showing the maximum taxable earnings for all previous years for you to compare to your earnings record.

2. Choose when you’ll apply for benefits

Choosing your Social Security claiming age might not seem important right now, especially if you’re decades away from becoming eligible for benefits. But developing a plan, even if it’s tentative, can help you figure out how much you need to save on your own in order to cover all of your living expenses in retirement. Without an idea of how much you’ll get from Social Security, you run the risk of being too optimistic and running out of money in retirement.

You may know that you can sign up for Social Security benefits as soon as you turn 62, but you don’t have to sign up then. And doing so could potentially reduce your lifetime Social Security benefit. That’s because applying at 62 is technically considered claiming early.

The government assigns everyone a full retirement age (FRA) based on their birth year. For most workers today, FRA is somewhere between 66 and 67. Claiming under this age is considered early claiming. You’ll get more checks this way, but each one is smaller. If you sign up right away at 62, you only get 70% of your full benefit per check if your FRA is 67 or 75% if your FRA is 66.

Every month you wait to sign up increases your checks a little until you qualify for your maximum benefit at 70. That’s 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.

But delaying benefits isn’t always the best choice. It could lead to a larger lifetime benefit if you live into your 80s or beyond. But those with a shorter life expectancy and those who need their Social Security checks to help them pay their bills may prefer to sign up earlier.

If you need help deciding, there’s a calculator in your my Social Security account that can help you estimate your benefit at any age between 62 and 70. Choose a few ages you’re interested in, multiply each monthly benefit by 12 and then by the number of years you expect to claim to get your estimated lifetime benefit. For example, a $2,000 monthly benefit claimed for 20 years gives you a lifetime benefit of $480,000.

Once you know roughly how much you’ll get from the program, you should be able to work out how much you need to save on your own to cover the rest of your retirement expenses. Use this information to help you choose your savings goals for 2023. But don’t be afraid to adjust your strategy over time. If your retirement plans change, you may also want to rethink when you claim Social Security.

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