Don't Make These 7 Social Security Mistakes

Image source: Getty Images.

You really don't want to make mistakes when it comes to Social Security. Why? Well, because it's likely to make up a major chunk of your income in retirement. According to the Social Security Administration, the majority of elderly beneficiaries get 50% or more of their income from Social Security, while 22% of married elderly beneficiaries and 47% of unmarried ones get fully 90% or more of their income from it. Why settle for less money than you could receive in retirement? Don't make these seven Social Security mistakes:

Thinking you're out of luck and won't get any benefits

If you've worked mostly in the home, without receiving paychecks or having much or any taxable income, you might reasonably assume that you're out of luck when it comes to being entitled to Social Security. You'd be wrong, though. If you're married, divorced, or widowed, you may be able to claim benefits based on your current, ex-, or late spouse's earnings record -- generally between 50% to 100% of the spouse's benefit. (Divorcees will need to have been married for at least 10 years and not have remarried.) And if Hillary Clinton is elected president, she'd like to expand Social Security benefits for widows and those who took time out of the paid workforce to care for a child or sick family member.

Image source: Getty Images

Not having a clue how much you're likely to receive

Another Social Security mistake is not having any idea how much you can expect to receive from Social Security in retirement. Without knowing, it will be hard to know how much you need to save up, to provide the rest of your needed retirement income. Fortunately, this is an easy problem to solve. You can find out how much money you can expect to receive from Social Security via a visit to its website at (To give you a rough idea, the average Social Security retirement benefit was recently $1,344 per month, or about $16,000 per year, while the maximum benefit for those retiring at their full retirement age was recently $2,639 per month -- or about $32,000 for the whole year.)

Not working for 35 years

You might not think that it matters how long you've worked before you start collecting Social Security, but it does. The formula used to compute your benefits is based on your earnings in the 35 years in which you earned the most money (adjusted for inflation). If you only earned income in 27 years, the formula will be incorporating eight zeros, which will shrink your benefits considerably. If you're planning to retire after 33 years of work, it might be worth it to work at least two more years. Even if you have worked 35 years, if you're currently earning much more than you have in the past (on an inflation-adjusted basis), then you might consider working for another year or two, as each high-earning year will kick a low-earning year out of the calculation, boosting your benefits. (Thinking you can't change or in any way control how much you receive in benefits is another Social Security mistake!)

Thinking you have to start collecting at 65

Are you assuming that Social Security checks start arriving at age 65 for most people? Wrong! While the normal (or "full") retirement age used to be 65, it has been increased for many of us. For those born in 1937 or earlier, it's 65, and for those born in 1960 or later, it's 67. For those born between 1937 and 1960, it's somewhere in between. Despite that, though, you can start receiving benefits as early as age 62 and as late as age 70. (In fact, retirees are more likely to start collecting at age 62 than any other age.)

You can start collecting benefits as late as age 70-and they'll be bigger ones, too. Image source: Getty Images.

Starting to collect it too early

Starting to collect benefits early can be another Social Security mistake. By starting them at age 62, they may be about 30% smaller than they would have been had you started at your full retirement age. That's not necessarily a mistake, though, because get this: The system is designed so that total benefits received are about the same for those with average life spans no matter when they start collecting. Checks that start arriving at age 62 will be considerably smaller, but you'll receive many more of them. Despite that, though, if you expect to have ample income at 62 and perhaps for a few more years, and people in your family tend to live very long lives, you might want to start collecting later. Why? Read on.

Starting to collect it too late

By delaying when you start collecting Social Security, you can make your benefit checks bigger. Specifically, for every year beyond your full retirement age that you delay, you'll increase their value by about 8% -- until age 70. So delaying from age 67 to 70 can leave you with checks about 24% fatter. Remember, though, that it will still be a wash, if you live an average life span. You may be very ill, though, or belong to a family known for short life spans, or you might simply need all the income you can get at age 62. If so, starting to collect early is a smart move.

Coordinate with your spouse and you may end up with more money. Image source: Getty Images

Not coordinating with your spouse

Finally, a classic Social Security mistake is not coordinating with your spouse when you each start collecting. Married couples have lots of options when it comes to collecting Social Security benefits. For example, they might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early, while delaying starting to collect the benefits of the higher-earning spouse. That way, the couple does get some income earlier, and when the higher earner hits 70, they can collect extra-large checks. Also, should that higher-earning spouse die first, the spouse with the smaller earnings history can collect those bigger benefit checks.

There's a lot to know about Social Security, and the more you know and strategize about it, the more money you'll likely be able to collect from the system -- especially if you can avoid the Social Security mistakes above.

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