3 Social Security Mistakes

Christian talk radio with Rob West

When should I start taking my Social Security benefits? At 62? Or should I wait until full retirement age? Or longer? Strategies for claiming Social Security benefits can be complicated and confusing, and making a mistake could cost you a lot of money. So today on MoneyWise, we’ll reveal 3 common errors people make when claiming benefits and how to avoid them! THREE COMMON SOCIAL SECURITY MISTAKES 1. CLAIMING BENEFITS EARLY: Just because you can take your benefits at age 62 doesn’t mean you should. Your benefit will be permanently reduced by 8% for each year you take them before your full retirement age. Your benefit can be further reduced if you continue working after receiving benefits and earn more than $18,960. For every $2 you earn above that threshold, your benefit will be reduced by $1. The only good news there is that those lost benefits will be restored incrementally once you reach full retirement age. There’s another reason you should think long and hard before taking Social Security benefits early. If you’re the higher wage earner, your decision to take benefits early could impact not only you but also your spouse. If your spouse survives you and has a lower SS benefit, he or she would be eligible to draw a survivor benefit in the amount you were receiving in benefits before your death. However, if you elect to take your benefit early, your surviving spouse will be locked into that lower amount for life, as well. So if you don’t desperately need the money, it’s almost always best to wait as long as possible before claiming Social Security benefits, at least until full retirement age. Your benefit will increase by 8% every year you wait beyond your full retirement age up to age 70. 2. NOT DRAWING A SPOUSAL BENEFIT: The next common Social Security mistake is not drawing a spousal benefit. Now, this one only applies to folks who were born on or before January 1, 1954. If you’re married and reach Full Retirement Age (FRA), and you haven’t drawn your own Social Security benefit, you can decide to start receiving it then or wait and let it build another 8% a year up to age 70. But if you were born before 1954, you can opt to take benefits but restrict them to spousal benefits only. As long as your spouse has filed for benefits, you’ll be eligible to receive half of your spouse's full retirement age benefit. 3. NOT DRAWING BENEFITS AFTER A DIVORCE: Whether you divorced recently or quite a while ago, you may think you’re not eligible for a Social Security benefit from your ex-spouse. That’s not the case. If your ex-spouse is still living, you could qualify for a spousal benefit based on his or her work record. To qualify, you must have been married for at least 10 years, be at least age 62 and currently unmarried. This is the case even if your ex-spouse has remarried. If your ex-spouse is deceased you could be eligible for a survivor benefit off of your ex-spouse’s Social Security record, even if you’ve remarried - with some exceptions. The folks at the Ronald Blue Trust have a great article with more information about the 3 mistakes we outlined today. You’ll find that article on our website. And we also recommend you consult with a financial advisor before making any decision about Social Security benefits. Proverbs 15:22 says, "Plans fail for lack of counsel, but with many advisers they succeed." You can find a Certified Kingdom Advisor at MoneyWise.org. LISTENER QUESTIONS On today’s program, Rob also answers listener questions: ●Is it wise to wait beyond retirement age to begin drawing Social Security benefits? ●What is the difference between a will and trust? ●What is the best way to invest beyond IRA's and 401k accounts? ●How should a college student balance using funds in a savings account to pay for college vs investing for the future? RESOURCES MENTIONED DURING THIS PROGRAM ●SoundMindInvesting.org ●Betterment ●Schwab Intelligent Portfolios Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to [email protected] Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app. Like and Follow us on Facebook at MoneyWise Media for videos and the very latest discussion! Remember that it’s your prayerful and financial support that keeps MoneyWise on the air. Help us continue this outreach by clicking the Donate tab on our website or in our app.