11 Social Security Mistakes That Can Cost You a Fortune
11 Social Security Mistakes That Can Cost You a Fortune
GOBankingRates Gabrielle Olya Thu, July 21, 2022
Whether you're counting on Social Security to fund most of your retirement income or supplement it, you want to make sure you get all of the money you're entitled to. However, with so many ways to claim benefits -- especially if you're married or used to be married -- small mistakes could end up costing you a lot of money over the rest of your life. By knowing which Social Security mistakes to avoid, your retirement will be easier to handle -- even if you aim to retire early.
The Mistake: Not Checking Your Earnings Record
Even if you're decades away from claiming Social Security, you could be making a big mistake if you don't keep track of your yearly earnings.
The amount of Social Security benefits you receive depends on your earnings record, so if that record is incorrect, you might not receive the benefits you're entitled to.
Errors can occur for a variety of reasons, including an employer reporting an incorrect amount of earnings or your earnings not showing up because you got married or divorced and your name change has not been processed correctly.
What To Do: Check Your Social Security Statement While Working
To avoid losing money due to errors in your earnings record, check your statement annually. If you notice errors, gather proof of your earnings to send to the Social Security Administration, such as your W-2 or pay stubs. Once the Social Security Administration has verified your claim, it will correct your record.
It's much easier to prove an error that happened the previous year, when you still have your records handy, than it is for 10, 20 or more years ago because you probably don't have a paper trail going back that far.
The Mistake: Not Working Long Enough
To qualify for Social Security retirement benefits, you need at least 40 work credits. You can earn up to four credits each year based on your earnings. For 2019, you must earn $1,360 to get one credit, or $5,440 to get the maximum of four credits.
In addition, your benefits are calculated based on the average of your 35 highest-earning years. If you have fewer than 35 years of earnings, $0 will be averaged in for each year you don't have earnings.
What To Do: Do the Math Before Retiring
As you're approaching retirement, check your earnings statement first to make sure you have enough credits to qualify for Social Security. If you don't already have 35 years of earnings, consider whether working an additional year or two could help boost your Social Security benefits.
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