Each month, the Social Security Administration (SSA) makes more than 70 million payments to beneficiaries of the Social Security program, the majority of whom are retired workers. The amount of benefits paid to an individual depends on several factors, including age at retirement, length of work experience, salary earned during that period, and amount of tax paid to Social Security..
Social Security Horror Stories, a new book by Boston University economist Lawrence Kotlikoff and personal finance expert Terry Savage, explores common mistakes and frequently asked questions people often make when claiming benefits. , introducing current and future recipients. We’ve reviewed some of the most common ones you should know.
Determine when it’s time to retire
Their first recommendations are not about mistakes made by the SSA, but rather advice for those planning to retire. Retirement age is an important decision. Unfortunately, many people make the mistake of claiming pension benefits when they reach the minimum retirement age of 62 years.. This can reduce your monthly check by up to 30%. A better option is to wait until age 67 or up to age 70. Workers can defer applying for benefits in order to receive higher amounts, and those who wait until age 70 can receive until approximately their 70s. 76% more than those who applied at age 62. Therefore, it is important to carefully consider your retirement age to ensure you receive the maximum possible benefits.
Are you paying too much in SSA?
Overpayments are a serious problem that affects more than 1 million Americans each year. This occurs when the Social Security Administration (SSA) incorrectly calculates and sends more money to the beneficiary without the beneficiary’s knowledge. Years later, you often find out about the overpayment when you receive a refund letter from the SSA. Such mistakes can occur for various reasons, but And challenging them can be a daunting and time-consuming process that can take months or even years.. It is therefore recommended that the worker keep detailed records of her interactions with the SSA. Contains information provided to the agency, income and income history. This will help you avoid overpayment issues and ensure you receive the right amount of benefits.
The impact of working on social security benefits
Many people lost thousands of dollars because of the earnings test. This rule applies to people who apply for Social Security benefits before reaching full retirement age and continues to work, requiring them to pay taxes if they earn more than a certain threshold. The threshold changes every year and will be $21,240 in 2023.
Under this rule, workers would lose $1 in Social Security benefits for every $2 they earn above the limit. This can deter many people from continuing to work. However, there is a rule called the Adjustment Reduction Factor (ARF) that recovers lost benefits once you reach full retirement age (70)..
Notes for those receiving survivor benefits
Widows are eligible to receive Social Security benefits based on their spouse’s income. What you can claim from age 60. However, once she becomes eligible for SSA payments, her SSA payments that she was receiving due to her status as a widow will end. If SSA discovers that you receive both benefits; You could be asked to pay back thousands of dollars..