3 Social Security Mistakes You Might Not Even Realize You’re Making Smart Change: Personal Finance

(Christie Bieber)

Social Security is complicated. This is unfortunate, as it will likely be a significant income source, and you could end up costing yourself significant profits if you don’t know the rules.

You don’t want to make those Social Security mistakes that leave you with less financial security in your later years, so make sure you’re not making these three big mistakes.

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1. Assessing more of what Social Security will do for you

Expecting too much from Social Security is one of the biggest and most damaging mistakes future retirees make. If you think your retirement benefits will be enough to support you, you’re very wrong, and you should correct it ASAP.

Here is the reality. social Security Replaces about 40% of pre-retirement income, even less if you are a high-income. One cannot or cannot take a 60% pay cut upon retirement. That’s why you should have a detailed plan of how you will bring in the other income needed to cover your costs.

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Most experts estimate that you’ll need to replace about 80% or more of your pre-retirement income. If 40% of that comes from Social Security and you don’t have a pension, the rest will need to come from your investment accounts — unless you’re confident you’ll work part-time in retirement.

2. The Impact of Taxes on Your Benefits May Be Overestimated

Many people don’t really understand how Social Security taxes work, and this can be a big mistake if you’re expecting more after-tax income.

The truth is, Social Security benefits are partially taxed once countable income equals $25,000 for single tax filers or $32,000 for married joint filers. Countable income is all your taxable income, half your Social Security and some non-taxable income. The $25,000 and $32,000 limits do not change to account for inflation, so many senior citizens are taxed each year as benefits increase due to wage increases and cost of living adjustments.

If you live in one of these Tax Social Security Benefits in 12 StatesYou could lose even more money on top of what the IRS charges. That’s why it’s important to confirm that you have enough to live on when you retire when calculating your potential tax bill.

3. Miscalculating when you’ll file for your first check

Finally, many future retirees have overly optimistic plans for when they will first receive a Social Security check. Many people want to work, and wait to claim benefits, until their late 60s or even 70, until the largest possible monthly payment is available.

However, life often gets in the way. If health issues or family issues force an earlier retirement, or if you simply decide that you can no longer go to work, you can claim Social Security sooner than you expected.

To make sure you don’t end up with a serious shortfall, you’ll want to recognize all of these facts about your retirement check. Ideally you should plan to have enough supplemental savings to support yourself with Social Security benefits. 62. claimed on, after the applicable taxes are deducted from it. This will help ensure that you are truly ready to retire without financial hardship.

The $18,984 Social Security Bonus Most Retirees Completely Overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a few little-known “Social Security secrets” can help ensure an increase in your retirement income. For example: A simple trick could end up paying you as much as $18,984 every year…! Once you learn how to maximize your Social Security benefits, we think you can retire confidently with peace of mind. To learn more about these strategies just click here,

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