3 Social Security Mistakes

Strategies for claiming Social Security benefits can be confusing and making a mistake could cost you a lot of money. Here are three common errors people make concerning their benefits.

Your benefit can be further reduced if you continue working after receiving benefits and you earn more than $18,960. For every $2 you earn above that threshold, your benefit will be reduced by $1, although those lost benefits will be restored incrementally once you reach full retirement age.

Also, if you’re the higher wage earner, your decision to take benefits early could impact not only you but also your spouse. If your spouse survives you and has a lower SS benefit … he or she would be eligible to draw a survivor benefit. However, if you elect to take your benefit early, your surviving spouse will be locked into that lower amount for life, as well.

If you don’t need the money, it’s almost always best to wait as long as possible before claiming Social Security benefits, at least until full retirement age, up to age 70. An added incentive for waiting: Your benefit will increase by 8% every year you wait beyond your full retirement age, up to age 70.

Another common Social Security mistake is not drawing a spousal benefit. This only applies to folks who were born on or before January 1, 1954. If you’re married and reach Full Retirement Age (FRA) and you haven’t drawn your own Social Security benefit, you can wait and let it build another 8% a year up to age 70.

Meanwhile, you can opt to take spousal benefits only. As long as your spouse has filed for benefits, you’ll be eligible to receive half of your spouse's full retirement age benefit.

The third common Social Security mistake is not drawing benefits after a divorce. Whether you divorced recently or quite a while ago, you may still be eligible for benefits from your previous marriage.

If your ex-spouse is still living, you could qualify for a spousal benefit based on his or her work record. To qualify, you must have been married for at least 10 years, be at least age 62 and currently unmarried. This is the case even if your ex-spouse has remarried.

If your ex-spouse is deceased, you could be eligible for a survivor benefit off of your ex’s Social Security record, with some exceptions. To qualify, you had to be married at least 10 years, be at least age 60 or older, and currently unmarried. You may still be eligible, however, if you remarried after age 60.