The Social Security Administration estimates that of the 46 million Americans who receive Social Security benefits, 21% of married couples and 45% of single people depend on it for a huge 90% or more of their income.
Social security 2022: How COLA will increase the benefits for the average senior couple
Discover: How To Increase Your Social Security Benefit By $ 800
Since social security benefits carry such weight later in life, it is important to plan them accordingly. Here are some of the biggest mistakes you should avoid when requesting or planning SS benefits, and what can cost you a lot:
One of the biggest factors in the amount of benefits you receive in your social security check per. month, will be when you decide to start claiming benefits. The earliest you can claim benefits is 62 years old and the latest is 70 years old. Should you claim 62 years, you will receive approx. 30% less in your monthly check than you would if you claim benefits at 70. Although the total amount you will receive during your lifetime will be more or less the same, it is important to remember that previous claims means slightly reduced checks. This is important to take into account budgets and overall quality of life when considering retirement. You do not want to be stuck in a position where you have retired, but operate on the premise of a larger check than is actually coming to you.
2. Not to take spousal benefits
Another major potential boost to your social security benefits may come in the form of spousal benefits. If you were previously married, widowed or currently married and retired, it is possible you can Increase your Social Security check by $ 800 a month if you are entitled to spousal benefit. Of course, there are conditional provisions, such as not remarrying, and your spouse has earned more than you during their working life, but eligible retirees can increase their monthly check significantly.
To forget SSI
The Supplemental Security Income program provides monthly payments to adults and children with disabilities or blindness who have incomes and resources below specific financial limits. SSI payments are also granted to persons aged 65 and over without disabilities who meet the financial qualifications. SSI payments are paid monthly, but usually on a different day than social security payments. SSI, if you are eligibleis a great way to add to the monthly benefit income that you may not have thought of.
4. Social security tax
Many often overlook the fact that social benefits could be subject to federal income tax. The amount you could potentially be taxed on ultimately depends on your overall income level. This can mean that if you deduct tens of thousands of dollars each month from other investment sources such as annuities, life insurance and brokerage accounts, your benefit can most likely be taxed as ordinary income.
5. Not having a backup
A large number of Americans depend on social security income for the vast majority of their expenses. This can lead to problems along the way – especially in a year like 2021 where prices have risen 7%, making it harder for those living on a fixed income. Generations of all ages will do well to make sure they have additional investment to help them retire comfortably.
More from GOBankingRates