Four Common Social Security Mistakes to Avoid
About the author: Chris Abts is the President & founder of Cornerstone based in Reno, NV. He helps people to better manage their wealth so they can focus more of their time on what truly brings meaning and fulfillment to their life. Abts is also a best-selling author and TV show host of Redefining Retirement, which airs every Sunday evening at 5:30pm on KTVN Channel 2.
Using simple math, I can show you that it makes sense to take your benefits early. Using the same math, I can also show you that it makes sense to defer your benefits until age 70. Here’s the point. If your goal is to maximize your Social Security benefits, then it is vital to consider your tax situation, your investment strategies, your income goals, and your legacy goals. This is how you truly maximize your benefits for your unique situation. Too many times, people make big mistakes when it comes to maximizing their benefits, simply because they don’t take other important areas into consideration when making this important financial decision. Make sure you understand your options and then run an analysis to find the right strategy for your particular situation. Based on my years of experience, these are the four common mistakes retirees make when it comes to understanding and maximizing Social Security benefits.
Mistake Number One: Underestimating the Real Value of Social Security. As pensions disappear, Social Security guarantees become even more important. Social Security benefits are quickly becoming the only source of guaranteed income for millions of retirees.
Mistake Number Two: Rushing to Collect, Then Regretting the Reduced Benefits the Rest of Your Life. All too often, benefits start without any analysis performed. By the time you realize you made a mistake, it may be too late to change your decision. When determining when to start your benefits, I suggest you take the following into account: your income goals, inflation, health & longevity, income taxes, and spousal benefits if married.
Mistake Number Three: Not Understanding the Various Ways Married Couples Can Integrate Benefits. Although Congress eliminated two important claiming strategies, there are still several ways that married couples can claim benefits to maximize their cumulative lifetime benefits.
Mistake Number Four: Getting Surprised by Taxes. Starting benefits early while still working can create an adverse tax consequence and penalty; however, not properly coordinating your Social Security benefits with your retirement account distributions can create an even bigger, longer term tax liability.
For more information on avoiding common Social Security mistakes, watch Redefining Retirement this Sunday evening at 5:30. I’ll cover the rules you need to know, and the mistakes you’ll want to avoid to help you make smart decisions when it comes to maximizing your Social Security benefits.