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Many people are waiting until they turn 62 to apply for Social Security retirement benefits. However, before doing so, you may want to reconsider 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 may be missing out on Social Security benefits you’re entitled to.
you are filing immediately
One of the biggest mistakes most retirees make is claiming Social Security as soon as they are eligible or even earlier. Although it may be tempting to start receiving those checks right away, doing so will permanently reduce your benefits. This can be tough on your budget when you take into account that people now have a longer life expectancy, and this is a lifetime benefit.
If you claim at age 62 instead of waiting for full retirement age (FRA), which is between 66 and 67 depending on your birth year, your benefits could be reduced by up to 30%. This means that if you receive $2,000 per month at FRA, you will only get $1,400 per month if you claim early. If you delay until age 70, you’ll see your monthly benefits increase by up to 8% per year.
However, sometimes it 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 it could significantly increase your lifetime Social Security benefits.
You’re Ignoring Spouse Benefits
Many Americans don’t know that they can qualify for Social Security spousal benefits. Whether you’re married, divorced, or have never worked, you can receive up to 50% of your spouse’s full retirement benefit, depending on their work record. Although no one wants to plan for how long they are expected to survive, it’s good to know that your partner is somewhat covered in your absence.
If your spouse is retired and has applied for benefits, you can claim spousal benefits before age 62. However, like regular benefits, claiming before your FRA may result in reduced benefits.
If your benefits are less than half your spouse’s, consider applying for Social Security spousal benefits. Even if you’re divorced, you may still be eligible for spousal benefits, provided 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 limited income.
You have not checked earnings records
The Social Security Administration (SSA) calculates your Primary Insurance Amount (PIA) based on the average of your highest 35 years of earnings. If your employer fails to report some of your earnings, it could mean losing thousands of dollars in retirement income. This is something that many people don’t realize until it’s too late.
Incorrect earnings records may result in smaller monthly checks 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 do not match, it may be an error, you should report it to the SSA. Make sure you correct all income record errors before filing.
You’re Ignoring Survivor Benefits
When one spouse dies, the surviving spouse is entitled to the Social Security benefits that his or her partner was collecting or would have collected. Most widows and widowers are eligible to apply for survivor benefits at age 60, but you can also claim at age 50 if you are disabled.
If you both work, you can begin collecting survivor benefits while allowing your own benefits to continue growing until age 70. If your benefits exceed your deceased spouse’s, you can switch. However, keep in mind that collecting benefits before your own FRA is subject to the deduction.
Caitlin Moorehead contributed reporting to this article.