Social Security Common Mistakes and How to Fix Them
It’s hard to pinpoint the best time to start collecting Social Security. Your decision to start your claim is based on many changing factors. Life expectancy, financial need, income and more could and leave you in a tough financial situation.
The two most common mistakes that people make when it comes to social security are claiming too early and continuing to work after starting to collect benefits. Another mistake is choosing to late claim but needing financial assistance earlier. This can be easily fixed by starting your claim when you need it. The two mistakes that we mentioned need immediate solutions to help the situation and get you a larger benefit later. Learning the basics and strategies of social security can also help you avoid mistakes but this blog will focus on fixing mistakes that are already made.
Claiming Too Early
Whatever your reason for choosing to claim your Social Security early, you are now regretting it. You realize that by claiming early, you receive a 7% reduction for every year you have claimed before your full retirement age. If you started your claim within the last year, there is good news. You can withdraw your claim under the following conditions:
- You made the claim less than a year ago.
- You are under the age of your determined full retirement age.
- All Social Security benefits received must be paid back.
- This is the first time you are attempting to withdraw a claim. (Only one withdraw per lifetime)
You can make a new claim to achieve better benefits when you’re ready. If you included your Social Security benefits when filing taxes, you may need to amend your tax returns to ensure the information is correct.
Continuing to Work After Claiming Social Security Benefits
You may decide to continue working after claiming Social Security benefits at your full retirement age. Your benefits increase the later in life you claim them. If you decide to work, you may not need to collect Social Security benefits now and prefer instead to receive more benefits later when you decide to retire. Like claiming benefits too early, the solution for getting more benefits later is to delay them. If you are past the age of full retirement than you can’t withdraw your claim, instead you can suspend your benefits so they can grow. Before you go suspend your benefits, there are a few things you need to know:
- Older than full retirement age but less than 70. When you want to suspend your benefits, you must be your full retirement age or older but be younger than 70. You cannot suspend your benefits after you turn 70.
- Earnings-based benefits are suspended. Any earnings-based benefits, including spousal benefits, are suspended. Divorced spouses will still be able to receive benefits.
- Out of pocket Medicare Part B premiums. Medicare Part B premiums can no longer be deducted from your monthly benefits. You will need to pay any premiums out of pocket.
- Ineligible for supplemental Security income. By suspending your Social Security benefits, you make yourself ineligible for Social Security Income even if you have received it prior to suspension.
If you have any questions or concerns about your Social Security plans, please use the contact form to reach out to our expert financial planners. Judith Barnhard and Aleksandr Seleznev can assist you with all your retirement and Social Security needs.
Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.