4 Key Signs You Could Be Leaving Social Security Money on the Table
Written by
Lydia Kibet
Edited by
Amber Barkley
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Many people look forward to turning 62 to file for Social Security. But before you do, you may want to rethink your decision and how it may affect your wallet. Every year, millions of retirees unknowingly leave money on the table.
Here are four signs you might be missing out on the Social Security benefits you deserve.
You’re Filing Right Away
One of the biggest mistakes most retirees make is claiming Social Security as soon as they become eligible or even earlier. While it may be tempting to start receiving those checks right away, doing so will permanently reduce your benefits.
If you claim at 62 instead of waiting for full retirement age (FRA), which ranges from 66 to 67, depending on your birth year, your benefits can be cut by up to 30%. This means that if you were to receive $2,000 per month at FRA, you’d only get $1,400 per month by claiming early. If you delay up to age 70, you’ll see an increase of up to 8% per year in your monthly benefits.
However, it sometimes makes sense to file early, especially if you have serious health concerns or don’t have any other retirement savings. But if you’re in good health and have some savings you can tap into, delaying can significantly increase your lifetime Social Security benefits.
You’re Ignoring Spousal Benefits
Many Americans don’t know that they could qualify for Social Security spousal benefits. Whether you’re married, divorced or have never worked, you could receive up to 50% of your spouse’s full retirement benefit based on their work record.
If your spouse is retired and has filed for benefits, you can claim spousal benefits as early as age 62. However, like regular benefits, claiming before your FRA could result in a benefits reduction.
Consider filing for Social Security spousal benefits if your benefits are lower than half of those of your spouse. Even if you’re divorced, you can still be eligible for spousal benefits, provided that the marriage lasted at least 10 years and you’ve never remarried.
Spousal benefits can also boost your retirement income if you’ve never worked or have had limited income.
You Haven’t Checked Earnings Records
The Social Security Administration (SSA) calculates your primary insurance amount (PIA) by averaging your highest 35 years of earnings. If your employer fails to report some of your earnings, this could mean thousands of dollars in lost retirement income. This is something many people don’t realize until it’s too late.
An incorrect earnings record could lead to a smaller monthly check for life. That’s why it’s important to review your Social Security statement once a year and compare it to your W-2s or tax returns.
If the numbers don’t match, that could be an error you should report to the SSA. Make sure you fix all earnings record errors before filing.
You’re Overlooking Survivor Benefits
When one spouse passes away, the surviving spouse is entitled to the Social Security benefits their partner was collecting or would have collected. Most widows and widowers are eligible to file for survivor benefits at age 60, but you can claim as early as 50 if you’re disabled.
If you both worked, you could start collecting survivor benefits while allowing your own benefits to continue to grow until age 70. If your benefits outgrow those of your late spouse, you can switch. However, keep in mind that collecting the benefits before your own FRA is subject to reduction.
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