Millions of seniors rely on Social Security as a major source of retirement income. If you plan to do the same, then you will need to do your part to avoid reducing your benefits – and this may mean being clear about the following mistakes.
1. Do not work for 35 years
Your Social Security benefits are calculated based on your wages during your 35-year high-wage years. But each year when you do not have income on record, you will have $ 0 contained in your personal equation, resulting in lower monthly benefits.
To avoid this, make sure you have spent a full 35 years in the workforce. Doing so can actually help boost your profits – first, by avoiding those dreaded $ 0s, but at the same time, potentially dividing higher wages into your calculations. Many people make more money later in their career than before. If your earnings are at their peak now, and you work one more year to complete it, you can add a salary that is much higher than what you earned three decades ago (even if your previous salary was inflationary. Will be adjusted when determining) What monthly benefits do you get).
2. No waiting till the full age of retirement is filed
Although your earnings history will determine your monthly Social Security benefits, you will not be entitled to collect it until you reach full retirement age, or FRA. Your FRA will depend on your year of birth, and if you were born in 1960 or later, it is 67. Otherwise, it is 66, or 66 and a specific number of months. You can file for social security until the age of 62, but every month when you sign up next to the FRA, your benefits will be reduced on a permanent basis. And it is a bad thing if you do not have a lot of money in retirement savings and those benefits are needed to ensure that you are able to make ends meet as a senior.
3. Delay in benefits over 70 years old
Just as you get the option to sign up for Social Security before the FRA, you can delay the previous benefits of the FRA and increase them by 8% in the process. But don’t postpone your filing for too long. Once you turn 70, you will stop accumulating delayed retirement credits that increase your benefits, so waiting beyond that point can mean that you are out of income that would otherwise be out of your income. Was nearby.
4. Retiring in a state that enjoys taxes
If your earnings exceed a certain threshold, your Social Security benefits may be subject to federal taxes. But some states also impose their own tax on social security. Tax benefits to some extent in these 13 states:
- new Mexico
- North dakota
- Rhode Island
- West Virginia
Now if you are low income, you may qualify for exemptions in most of these states that will exclude you from paying those taxes. But Minnesota, North Dakota, Vermont and West Virginia offer no exemptions.
The last thing you want to do is your social security income and the struggle in retirement because of it. Keep in mind that to avoid these mistakes, make sure that you get as much money from Social Security as you are entitled to.