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A shocking statistic from a research study featured in Forbes is getting a lot of attention — 96% of Americans claim their Social Security benefits at the wrong time. And this mistake costs them an average of $111,000.
Even the most sophisticated investors make mistakes with filing for Social Security, and it costs them a lot more than $111,000. Below are three common mistakes that could needlessly cost you thousands of dollars.
Mistake #1: You can't rely on a one-size-fits-all strategy
While 62 is the earliest age you can start collecting Social Security, conventional wisdom says you should delay filing for as long as possible so you get a bigger check. Many advise at least waiting until your full retirement age because that's when you can start receiving your full retirement amount. The Social Security Administration puts that number between 66 and 67 years old, depending on the year you were born. (If you were born in 1960 or later, it's 67.)
However, it's not always that simple. For some people, it makes sense to retire later and wait to collect the maximum Social Security benefit. But others could lose money by delaying retirement.
The strategy that could help you get the most from Social Security will be totally unique to you. Don't rely on a one-size-fits-all strategy or traditional rule of thumb.
Mistake #2: Ignoring the impact Social Security could have on your taxes, Medicare premiums and other benefits
Most people are solely focused on how to get the biggest benefits check. But there's more to it than that. Your decision could trigger an avalanche of taxes, double your Medicare premiums, and cause you to forfeit other benefits. It's critical you don't base your decision on just the amount of your benefits.
For example, B.O.S.S. Retirement Solutions once worked with a nice couple from Salt Lake City that could have lost hundreds of thousands of dollars from filing at the wrong time. A customized analysis revealed that their strategy would trigger a massive tax bill of $137,251 on their lifetime benefits.
We outlined a different strategy that could eliminate these taxes, so they could keep this $137,251 in their pocket. That kind of money could go a long way in retirement.
Mistake #3: Counting on the Social Security Administration to help you with your decision
Most people don't realize it, but the people at the Social Security Administration are forbidden to give any personalized advice on filing for your benefits. And in their defense, they're not equipped to offer advice on how this decision could impact your taxes, Medicare premiums and other benefits.
So, you can't rely on the Social Security Administration to help you with claiming your benefits. It's 100% up to you.
Of course, that doesn't mean you have to figure everything out on your own. A professional advisor can help you formulate a plan that makes sense for your unique financial situation.
"Even if you're close to—or already in—retirement, an advisor may be able to suggest ways to better manage your income and investments as well as avoid unnecessary taxes," writes Adam Hayes for Investopedia.
Filing for your social security benefits will be one of the most important financial decisions of your life. Hundreds of thousands of dollars are at stake.
The only way to get the most out of your benefits is to get a customized social security analysis that considers everything, including your benefits, taxes, Medicare premiums, spousal benefits, required minimum distributions and more.
Many companies charge several hundred dollars for a customized analysis. But B.O.S.S. Retirement Solutions underwrites this cost as a courtesy.
If you have questions about your social security benefits, or if you would like to schedule a customized analysis, we're always here to help. The strategies we use are best suited for people who have saved more than $200k for retirement. Give us a call at 801-216-3683 or email firstname.lastname@example.org.
Ryan Thacker and Tyson Thacker are the president and CEO of B.O.S.S. Retirement Solutions with six offices throughout Salt Lake City. They are the winner of Utah's Best of State Award for retirement planning for the past two years.
This is for illustrative purposes only, results may vary. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials provided by Infinity Marketing Services.