Don’t Let Your Benefits Melt Away: Avoiding Common Social Security Mistakes This Summer

Navigating the intricacies of Social Security retirement benefits can be challenging, especially as summer approaches and many retirees consider making significant lifestyle changes. Whether planning to travel, relocating, or enjoy unlimited leisure, it’s crucial to stay informed and avoid common missteps that could impact financial confidence in retirement. Here’s a guide on how to prevent common Social Security retirement benefit mistakes this summer.

1. Claiming benefits too early

One of the common errors is claiming Social Security benefits prematurely at age 62. While the temptation to begin receiving monthly payments is strong, doing so may mitigate one’s lifetime benefit amount. The more extended benefits are delayed, up to age 70, the higher the benefit may be. This is due to delayed retirement credits that may increase the benefit payout each month of waiting beyond the full retirement age. Before deciding, assess your financial needs, health status, and life expectancy to determine the appropriate time for claiming benefits.

2. Overlooking Spousal and Survivor Benefits

Many retirees are unaware of their eligibility for spousal or survivor benefits. If your spouse earned a higher income or passed away, you might be entitled to receive benefits based on their work record rather than your own. These benefits may result in higher monthly payments. It’s vital to thoroughly explore your situation with a Social Security representative or financial professional. Always compare your projected benefit with any spousal or survivor benefit to work toward managing retirement income.

3. Earning too much after retirement

Returning to work part-time during the summer or pursuing seasonal employment is common among retirees. However, earning above specific income thresholds before the full retirement age can temporarily withhold Social Security payments. For 2025, if earning more than $23,400, $1 may be withheld for every $2 earned above this limit. Stay aware of these limits to avoid an unexpected reduction in benefits.

4. Failing to account for taxes

Not all retirees realize that Social Security benefits may be taxable depending on their combined income. If you plan significant withdrawals from retirement accounts or may have other sources of income this summer, you could inadvertently increase your tax liability. Consult a tax professional or utilize IRS resources to understand potential tax obligations and strategically decide when and how much to withdraw.

5. Ignoring annual statements and updates

The Social Security Administration (SSA) provides annual statements outlining your estimated benefits and earnings history. Failing to review these documents for accuracy can lead to errors in your future payments. Take time this summer to log onto the SSA website, review your account information, and correct any discrepancies promptly.

6. Neglecting to factor in inflation

While Social Security offers cost-of-living adjustments (COLAs), retirees often underestimate the erosion of their spending power over time due to inflation. Plan withdrawals and expenses with inflation in mind to maintain your desired standard of living throughout retirement.

In summary, avoiding common Social Security retirement benefit mistakes requires proactive planning and attention to detail. By considering factors such as timing, benefit options, employment income, taxes, record accuracy, and the impact of inflation, you can enjoy a more secure retirement—this summer and beyond.

4485027-0525a The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. This information is provided as general information and is not intended to be specific financial guidance. This presentation is not endorsed or approved by any other Government Agency. This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

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