Three Mistakes You Should Avoid While Filing for Social Security Benefits

After contributing so much to the social security program, you naturally want to reap its benefits when you retire.

However, it’s easier said than done because navigating social security can be a cumbersome process. You may end up making these three mistakes, which can be avoided.

1. Assuming a One-Size-Fits-All Plan Works

The biggest mistake people make is depending only on Google to learn about social security benefits. They do get information, but it’s rather generic and not individualized per person’s case.

The mistake they make is not realizing that they should make personalized calculations based on their financial needs, household budget, and additional income.

Most retirees will have a straightforward experience while claiming social security benefits. But you never know who needs specialized aid.

That’s why it’s better not to listen to advice from a broad perspective. There are multiple strategies and advice to consider an overall perspective about social security benefits.

The best way to avoid this mistake is by first creating your personalized financial plan before claiming your benefits. It would help if you also did your research to understand its inner workings.

You may need help here, either from a financial adviser or your Glendale social security lawyer.

2. Not Realizing How Much You Can Receive

After working and contributing to the program, you will most likely receive a statement of benefits. You take a look at the figure and assume that it’s the amount you will be receiving every month once you retire.

However, it’s not true.

It’s just an estimate and not the actual amount you stand to receive because it depends on various factors.

The amount is typically how much you stand to receive if you wait till your full retirement age to claim your benefits. And it’s calculated assuming you will be working, and contributing to the program, until your retirement age.

So you cannot expect to receive that amount if you stop working before your full retirement age, and collect your benefits.

Also, remember that the amount on the statement is pre-tax.

This means that some tax will be deducted from your monthly check before you receive it. You will have to do your calculations and find out how much you will receive.

3. Thinking Social Security Benefits Are Enough in Retirement

retirement

Don’t make the mistake of assuming that your social security benefits will pay for all your monthly expenses.

It’s not always true. It may suffice only if your budget is minimal, and you don’t have extra expenses.

It’s because social security benefits usually pay for only 40% of your income post-retirement. You will need enough to pay for at least 80% of your pre-retirement expenses if you want to maintain the same lifestyle.

There’s the additional healthcare expense you have to take into consideration while budgeting for retirement. You never know how much you will have to spend on healthcare after you retire!

It’s better downsizing your living standard significantly if you plan to depend solely on social security benefits after retiring. You can do this by sacrificing and reducing your housing, transportation, and entertainment expenses.

In short, it’s better to not depend only on social security benefits for your retirement funding. Various other attractive options can help fund your retirement, like your company’s 401(k) plan.

As long as you avoid these three mistakes, you should be able to plan your retirement rather well. It’s your retirement budget you are planning, and you cannot afford to make mistakes with your calculations. You need to assess how much you will actually receive.

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