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Millions of seniors get the bulk of their retirement income from Social Security. Chances are, those benefits will serve as an important source of income for you as well — but if you’re operating under the assumption that you’ll get a certain benefit, winding up with a much lower one could really hurt you. Here are just a few reasons why your Social Security income may end up being less robust than anticipated.
1. You file for benefits too early
You’re entitled to your full monthly Social Security benefit (as based on your earnings history) once you reach full retirement age, or FRA. FRA varies based on when you were born. If your year of birth is 1960 or later, your FRA will be 67. If you were born earlier, it’ll be 66 — or 66 and a specific number of months.
You’re allowed to sign up for Social Security as early as age 62, but if you go that route, your benefits will be slashed on a permanent basis by anywhere from 25% to 30%. In fact, for each month you file before FRA, you’ll face a reduction in benefits. To avoid that, commit your FRA to memory and wait until you reach it to sign up. You can even delay your filing past FRA and boost your benefits by 8% a year up until age 70.
2. You forget to file at age 70
Delaying your Social Security filing past FRA will give you a higher monthly benefit. Once you turn 70, though, the delayed retirement credits you get for waiting stop accruing. If you don’t sign up to get your money at 70, you risk losing out on income that could’ve been yours.
To avoid missing out on benefits, mark your calendar to sign up for Social Security on your 70th birthday. If you forget initially, fear not. You can file up to six months after that point and get a lump-sum retroactive payment — but beyond that point, you’ll be out some money.
3. You don’t correct errors on your earnings record
Social Security doesn’t pay seniors a universal benefit each month. Rather, your monthly benefit is based on your specific earnings record. If that record is incorrect, it could result in a lower monthly benefit for life.
To avoid that scenario, check your earnings statement from the Social Security Administration (SSA) every year. If you’re 60 or older, it will come in the mail. If not, you can access it on the SSA’s website. If you spot a mistake — say, lower earnings for a given year than what you actually brought in — you’ll need to let the SSA know to avoid losing out on money you’re entitled to.
In an ideal world, your Social Security benefits should represent just a portion of your total retirement income. In reality, they may end up constituting the bulk of it. It’s in your best interest to avoid a scenario in which you get less money from Social Security than you expect. Read up on the filing rules and check your earnings statements consistently to ensure errors don’t end up working against you.