If you’re a retiree or have a grandparent, or parent who is now enjoying the ripe years of their life, you know well enough how important Social Security checks are to them, especially if they don’t have a side business or investment paying off.
In order to evaluate the amount you are getting and how much you are actually entitled to, you need to polish your understanding of the ins and outs of Social Security.
From 2007 to 2017, the number of individuals receiving Social Security has increased from 31.53 million to 42.45 million, meaning the baby boomers are now nearing the age of retirement.
To give perspective to how many people are getting Social Security benefits, consider the fact that in 2018, more than 63 million people received these benefits; amounting to a staggering $1 trillion!
The alarming factor here is not the number of people relying on Social Security but the huge majority among them who don’t have a full grasp of their benefits.
Following are some of the top myths surrounding Social Security that you should be aware of to strengthen your retirement planning.
Myth: Claim Early For More Rewards
Social Security might be the most valuable retirement benefit that people have with chances that a normal couple would receive over $1 million in Social Security benefits. It is a common misconception though, that you would only cross the $1 million mark if you file for Social Security rewards early, i.e. from the age of 62.
Think of it this way; what would be more beneficial, $50 income for 12 years or $70 income for 10 years? You do the math.
Social Security is much like a fine wine, which gets better with age. The only difference is that Social Security benefits increase only until age 70, rising 8 percent per year up until age 70.
So keep in mind that it pays to wait.
By starting benefits at age 62, you agree to collect checks of lower amount for the rest of your life.
Myth: It Is Compulsory To Claim Benefits At Retirement
You don’t necessarily have to claim Social Security benefits right after you retire. As mentioned above, the longer you wait, the sweeter your pot will be. However, be careful about delaying your payments beyond the 70-year-mark!
It is important to consider one’s life expectancy as well when pondering over whether you should wait or start reaping the Social Security benefits. If you have an underlying condition that is somehow impeding your life expectancy beyond, say, the 65-year mark, you should consider starting receiving benefits from the age of 62.
Myth: I Can’t Work Once I Start Receiving Benefits
You are allowed to keep working after you file for Social Security benefits.
However, keep in mind that your job might have a certain impact on how much you receive in Social Security benefits. If you’re between the age of 62 and 70, earning above $17,040 will mean that $1 will be reduced for ever $2 that you earn above the limit.
If your income climbs above $45,360, $1 will be deducted for ever $3 you earn above the limit.
However, there is no such limit on earning and therefore no deductions after you reach the full retirement age. Another reason why you should wait before cashing in your Social Security checks!
Myth: The Decision-Making Process Is Fairly Simple
There are many financial and social security advisors out there that can help people with decisions that you don’t even think possible, in order to reap more benefits. A good retirement consultant can make a difference in income up to $250,000!
You should also consider consulting both, the Social Security Administration’s website and a financial advisor to go through your options and make the perfect decision for maximum Social Security rewards.
Myth: Your Decisions Are Final
If you have made a claiming decision you regret, such as cashing in too early, the state allows you one year to change your selection. This is highly appropriate because people are often quick to cash their Social Security checks, and ask for advice or think about their decision later.
However, keep in mind that reversing your decision to cash in could mean that you’d have to reimburse the Social Security Administration for whatever money you received. Doing so is worth it in the long run, as you’d be reaping thousands of dollars in extra benefits, should you decide to wait.
Myth: Your Social Security Record Is Always Accurate
Your Social Security benefits are based on the highest you’ve earned in the last 35 years. Although the record is made carefully, the large volume of people receiving these benefits means that there is a room for error. If the Social Security Administration does not have a correct record of your earnings, it will reflect directly on your calculations and result in lower-amount checks.
You should keep a record with yourself and recalculate how much your rewards should be. If there is any discrepancy, you can request your record to be revised or changed within three years, three months and 15 days from the end of the taxable year of the wages that need changing.
This 3-3-15 rule means that you should keep your records up to date even if you aren’t close to retirement.
An online account with the Social Security Administration is the perfect portal for you to do just that.
Keep these myths and their truths about Social Security in mind when making any future decisions to stop you from making the wrong financial decisions. After all, you should be enjoying your late years, not worrying about your cash inflow! Have a meet with your local Social Security office or a Social Security advisor and discuss the options you have, in order to reap the most rewards possible!