Avoid reducing your social security benefits.
If you plan to rely solely on your retirement benefit plan, you may want to rethink. Here's why.
USA TODAY
Social Security pays the average senior today $ 1,461 a month. Now, it is hardly enough to fund a pleasant pension, but it is not an insignificant amount either. In fact, these benefits can end up helping you stay afloat during the golden years. So it pays to take care of these three factors that can cut your benefits for life.
1. Doesn't Work In Full 35 Years
Your Social Security Benefits are calculated from your 35 best working years, which means that if you took a longer break from your career (say raising children or caring for a loved one), it may not have many year's income on record. The problem, however, is that for every year within the top 35 you do not have reportable wages, you will have a large fat $ 0 included in your personal distribution equation, thus reducing your monthly income.
The solution? Expand your career if you don't have 35 years of work under your belt. For each extra year you work, you replace a $ 0 with an actual income. And the chance is that your earnings will be higher than what your earnings looked like earlier in life, thus increasing your benefits even more.
The average privacy today receives $ 17,532 per year, but you may be entitled to much more when it comes to your file. (Photo: Getty Images)
2. Not Checking Your Earnings Statements
SSA provides an annual income statement to employees summarizing what their taxable wages lasted for the year, and how benefits might look like in retirement. If you are under 60, you will not receive a copy of this statement directly. Rather, you must create an account on the SSA website and access it there. But it pays to review the earnings statement every year, because if you discover an error that works against you, you can get it fixed so you avoid unnecessary reduction in benefits.
What kind of error can a statement of earnings contain? It may be that SSA has no income in the mail for you during a year when you actually have worked and paid taxes. Or it may have a lower amount on record than you have earned. Either scenario can result in a reduction in benefits if you do not take steps to rectify it.
3. Don't wait until full retirement age to file
Qualified seniors are allowed to begin collecting social security as early as 62 years. But if you do not wait for full retirement to claim benefits, you will lower them in the process.
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For every month you claim benefits before full retirement age, you face a reduction and one who remains in force permanently, unless you manage to deduct the application within one year of filing and repay the SSA all the money it paid to you. The most extreme cut in the benefits you can face is 30%, which would happen if your full retirement age is 67, but you send 62 as early as possible. But it's a pretty big hit to take, especially if you plan to rely on Social Security as a major source of income down the line.
Takeaway? Connect your full retirement age to memory and aim to wait until that age to file for social security benefits unless there is a compelling reason to claim benefits earlier.
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Although the average privacy today receives $ 17,532 a year, you may be entitled to much more when it comes to file. Avoid reducing your benefits unnecessarily as they may end up being a lifeline under retirement.
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