Planning for retirement is tricky. If social security is going to figure into your retirement plan, and it should, then you need to make sure that you avoid making common mistakes. The Social Security program is complicated and has many rules that can be easy to miss or misunderstand. Here are some of the more common mistakes that you can make when it comes to social security and retirement.
Not Knowing your Retirement Age
Do you think your retirement age is 65? If you do, then you would be making this very common mistake. For people born between 1943 and 1954, the full retirement age is 66, but it goes up after that.
Why is knowing your full retirement age so important?
While you may retire at 62 and begin to claim benefits, you would actually be cheating yourself. Those who retire at 62 will take a penalty, depending on how far away from full retirement age they actually are. The penalty can be as high as 25 percent!
Waiting until full retirement age also allows you to use certain program strategies. Filing and suspending is one of the strategies that you can use if you wait until full retirement age. Restricting to spousal benefits is another. They are not available if you retire sooner.
Waiting until the right age helps to maximize the amount of money you will get in the long run.
Forgetting to Consider Your Spouse
Anyone who has worked for at least 10 years is eligible for social security benefits. That means that even if your spouse has not worked for the majority of the time that you have been married, they may be eligible for benefits. If you don’t claim, you may be losing out.
Timing also matters. If you can delay claiming benefits for a higher earning spouse, then you may be able to claim delay benefits. This will increase the amount of money that you can receive each month based on how long you delay – up to nearly a 10 percent increase.
Running All the Numbers
Have you sat down with an expert to see everything that you and your spouse may qualify for? Once you have done so, you need to run through all the numbers and scenarios that are possible to see which one will provide you with the maximum benefit.
You may be surprised to find out that retirement order and strategies, like file and suspend, and waiting until the right age, can really make a difference in the amount of benefits that you get each month and year.
It is worth the time and effort to work with an elder law expert in your area to understand the social security process and laws, and discover which is the best path forward for you and your spouse.
Need Help with Elder Law, Retirement or Estate Planning?
If you need help with Social Security, retirement planning or any elder law issues, contact Stano Law group today.