January 18, 2022

3 Big Mistakes That Can Shrink Your Social Security Checks

Maximizing your retirement income can give you more security later in life. This is especially true of Social Security checks, which are guaranteed to last until you transition and are protected against inflation.

Unfortunately, many people accidentally shrink their checks and reduce this important source of support, rather than: maximizing.

There are three common mistakes that could leave you with less Social Security money than you hoped, all of which you definitely want to avoid.

A person looking at computer and financial documents.

Image source: Getty Images.

1. Don’t Fix Errors in Your Earnings Record

Your earnings record is the single most important factor in determining how much money you bring in Social Security Benefits. That’s because the benefits are based on the average wages earned during the 35 years that your wages were highest after adjusting for inflation.

If your income record is incorrect and you don’t get all the money you earned, the benefits will be lower. You can correct errors in this record, but you’ll need documentation, and it’s easier to make improvements if you spot the mistake soon after it’s made than if you wait decades later. That’s why it’s a big mistake not to confirm every year that your salary was reported correctly.

Fortunately, it’s easy to check your earnings record. Just log in to mySocialSecurity, and you can see what the Social Security Administration has recorded for your salary so far over the course of your career.

2. Get Enrolled in Medicare and Get Stuck with Higher Premiums

Applying for Medicare late can result in a penalty if you don’t get coverage once you qualify. For example, the Medicare Part B penalty can total 10% for every 12-month period you could have had but you didn’t apply.

The longer you wait to be covered, the higher the fine – and the extra costs will last a lifetime. Since Medicare premiums are typically paid directly from your Social Security checks, higher premiums mean your retirement benefits will be smaller. Make sure you understand Medicare Eligibility Rules and key deadlines, so you sign up for benefits in time to avoid this big mistake.

3. Working less than 35 years

As mentioned above, benefits are based on average wages over a 35-year period. This raises an important question: what happens if you don’t have such a long work history?

Unfortunately, if you don’t have a career spanning 35 years, the Social Security benefits formula remains the same. You just end up with about $0 pay years included in your calculation. These can pull down your average wage and result in a smaller monthly benefit.

The only way to avoid this would be to work for the required time. Now you can get benefits even with a shorter work history. You can be eligible after only 10 years of employment – ​​as long as you earn enough of those 10 years to earn the maximum”work creditsEvery year. But the shorter your career, the greater the impact on your monthly benefit.

This is definitely the hardest mistake to avoid. But if you’re short of a year or two, you can just keep working longer before you retire. Fortunately, it’s much easier to regularly check your income history and apply for Medicare on time so that you can avoid at least some of these benefits.


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