If you’re getting close to retirement age, you’re probably thinking about claiming social security benefits. But before you do, there are a few things you need to know.
First, when should you start taking benefits? You can start as early as age 62, but if you wait until your full retirement age (which is 66 or 67 for most people), you’ll get a higher benefit. And if you can wait even longer, until age 70, you’ll get an even higher benefit.
Second, how do you know how much money you’ll get from social security? The best way to estimate your benefits is to create a Social Security account. This will give you an estimate of your benefits based on your earnings history.
Finally, what should you do with the money you get from social security? You can either spend it or invest it. If you invest it, you could potentially grow your nest egg and have more money to live on in retirement.
So if you’re getting close to retirement age, make sure you know when to start taking benefits, how much money you’ll get from social security, and what you’ll do with the money. These are the three crucial moves to make before claiming social security.
William Schantz Explains the Mistakes to Avoid When Claiming Social Security
There are several mistakes that you must avoid before you claim your social security benefits to ensure that you’re getting the maximum value from your social security. William Schantz of Mid Atlantic Financial LLC explains some of them below for you:
1. Failing to start your benefits early enough:
You can claim social security as early as age 62, but if you wait until your full retirement age (FRA) – which is 66 for those born between 1943 and 1954 – you’ll get a bigger benefit. And if you can hold out even longer until age 70, your benefit will be even larger.
2. Not understanding how working affects your benefits:
If you’re still working while collecting social security, your benefits may be reduced if your earnings exceed certain thresholds. Conversely, if you claim benefits before FRA and continue to work, your benefit may increase once you reach FRA.
3. Not knowing that you can get a do-over:
If you claim benefits early and then realize later that you would have been better off waiting, you can suspend your benefits and accrue delayed retirement credits, which will increase your benefit when you restart it later.
4. Not being aware of the implications of taking a lump sum:
You can elect to receive your social security benefits in a lump sum, but you should be aware that this will reduce your overall lifetime benefits.
5. Not considering survivor benefits:
If you’re unmarried, you may not have thought about survivor benefits, but if you die before start collecting social security, your survivors may be entitled to a portion of your benefit.
6. Not realizing that you can change your mind:
If you claim social security benefits and then decide later that you want to suspend them, you can do so as long as you act within 12 months of starting to receive benefits.
7. Failing to plan for taxes:
Social security benefits are subject to federal income tax and, in some cases, state income tax as well. If you’re not planning for this, you may be in for a nasty surprise come tax time.
8. Not understanding how your benefit is calculated:
Your social security benefit is based on your highest 35 years of earnings, so if you have any years with zero or low earnings, they could bring down your benefit.
9. Not knowing that your benefit could be reduced:
If you receive benefits from a government pension, your social security benefit may be reduced.
10. Not considering all your options:
There are a lot of different ways to claim social security benefits, and the best way for you will depend on your individual circumstances. Be sure to explore all your options before making a decision.
Final Word from William Schantz
As William Schantz has just explained, if you’re thinking about claiming your social security benefits soon, you need to know what you’re getting into. You can’t be making simple mistakes that will affect you negatively and cause you to suffer a loss in earnings. Therefore, keep in mind the three crucial moves you must make first before claiming your social security benefits.