The Do's and Don'ts of Preparing for Social Security Benefits

July 16, 2021

 

Social Security is like a return on a (very) long-term investment. For decades, you contribute money from your paycheck so that you can receive payments when you retire.

If retirement is drawing nearer and you’re like the other 61 million Americans who rely on this government-backed system, you’ll need to know how to make the most of your money. With that in mind, here are some do’s and don’t’s to follow as you prepare to start collecting Social Security:

DO

…Calculate your expected benefits (and expenses)
Retirement is not the time to be surprised by your finances. Without your normal stream of income, you’ll want to know exactly how much you can expect from Social Security every month. How do you figure that out? The Social Security website provides calculators to estimate your earnings.

While you should also add up other sources of income that you’ll be receiving from your retirement plan or investments, you need to plan for new expenses as well. Enrolling in Medicare? You may be on the hook for a monthly premium.

…Estimate your life expectancy
Let’s be honest—anticipating when you’ll die is no one’s idea of a fun time. However, to maximize Social Security, it’s helpful to figure out at what age you should start collecting.

You’re able to receive reduced benefits as early as 62. But if you’re healthy and have parents who lived long lives, you might want to wait until your full retirement age, which varies depending on when you were born.

For more on how the government calculates pay-outs based on age, check out their benefits planner.

DON’T

…Retire before you’re ready
Some people can’t wait to wrap up their career to spend more time with family or hit the road in an RV. Others, however, might want to continue working, especially if their job keeps them fulfilled.

The bottom line is you should feel confident in your decision. It’s easier to keep working than it is to retire only to change your mind later; re-entering the workforce can be difficult.

…Forget to organize your documents
Once you’ve decided to start collecting Social Security, you’ll need the right documents. So if you’re unsure where to find things like your Social Security card or birth certificate, you should start looking now. Delaying retirement over paperwork would surely be frustrating.

BALANCE