3 All-too-Common Social Security Mistakes Retirees Make

Many seniors today rely heavily on Social Security to cover their basic living costs. And chances are those monthly benefits will play a big role in your retirement finances, too.

That’s why it’s so important to have a solid plan when it comes to claiming Social Security. Unfortunately, however, you could be at risk of making one of these mistakes that retirees are known to fall victim to.

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1. Filing for benefits too soon

Age 62 is the youngest age you can enroll in Social Security. But if you want the full monthly benefit based on your individual earnings history, you’ll have to wait until your full retirement age. That means staying well until age 66, 67, or somewhere in between, depending on your year of birth.

Now you may not be motivated to wait until retirement age, when there is an opportunity to get the money much sooner. But filing at age 62 can leave you with up to 30% less Social Security income each month. And that could make retirement much more financially stressful.

Before you claim benefits before your maximum retirement age, do an assessment of your savings and be honest about how much income you’ll get from your IRA or 401(k) plan. If it’s not much, then opting out of Social Security after age 62 — and ideally until full retirement age — is probably a safer bet.

2. Delaying benefits when in poor health

Although full retirement age is when you can collect your full monthly Social Security benefit, delaying your filing after that point could result in an increased monthly benefit. Specifically, you’ll increase that benefit by 8% for every year you delay claiming it until you turn 70.

Delaying Social Security makes sense in a number of situations. It’s a smart thing to do when you have little or no savings, and it could pay off if you’re healthy and likely to live a long life. But if your health is poor and you expect a short life expectancy, then putting off claiming Social Security until age 70 is one of the worst financial mistakes you can make.

While enrolling in Social Security at age 70 may leave you with more money each month, you risk losing lifetime income. So be honest about how you’re doing health-wise. And also consider your family history.

If your parents and grandparents were under 70, and your health at 60 is similar to theirs, then this is a sign that a delayed deposit is probably not best for you. You may even want to claim Social Security early to increase your chances of getting more lifetime income from it.

3. Forgetting the restore option

Age 62 is a fairly popular age to enroll in Social Security. But many seniors file at that point, see how drastically their monthly benefits are reduced, regret the move, and do nothing about it.

Now you might be thinking, “Well, what maybe what do I do about it?” But in fact, Social Security gives everyone who files a return in their lifetime. So if you file for benefits at age 62 and then decide it wasn’t the wisest move, you you can cancel the filing and repay those benefits within one year to have a chance at a later filing.

Of course, if you plan to use this option, you’ll need a backup income plan — money to replace the Social Security benefits you’ll no longer receive once you cancel your claim. But if you can work that out, you can set yourself up for a much bigger benefit later on.

It’s important to think carefully before applying for Social Security and know exactly how the program works. Read on about Social Security to avoid these and other costly mistakes that could cause you to lose money or make retirement more difficult than it should be.