5 Critical Social Security Mistakes That Could Cost You $111,000 in Benefits

Would you be upset if you lost $111,000 in retirement? According to research featured in Forbes, that’s exactly what happens to 96% of Americans due to Social Security mistakes. Your Social Security benefits could be worth far more than you realize – up to $500,000 for singles and over $1 million for married couples.

Here are the five critical mistakes that could cost you a fortune in benefits.

Mistake #1: Assuming Your Benefits Won’t Be Taxed

Prior to 1983, Social Security benefits weren’t taxable. That’s no longer the case. Today, up to 85% of your benefits could be subject to federal income tax.

Here’s how it works: If you’re married and your combined income exceeds $44,000, or single earning over $34,000, up to 85% of your benefits will be taxed. What’s worse? These thresholds haven’t been adjusted for inflation since 1993.

This “tax torpedo” can hit middle-income retirees especially hard. When you combine Social Security income with IRA withdrawals, pension payments, and other retirement income, you could find yourself in a much higher tax bracket than expected.

Mistake #2: Believing Social Security Is Going Bankrupt

You’ve probably seen the headlines about Social Security running out of money by 2033 or 2034. But what does this really mean for your benefits?

The truth is more nuanced than the headlines suggest. Even if no changes are made to the system, Social Security won’t disappear entirely. The worst-case scenario would be a reduction of about 25% in benefits.

For example, if you’re receiving $4,000 monthly in Social Security benefits, a 25% cut would reduce your payment to $3,000. While that’s significant, it’s far from the complete loss many fear.

The real issue isn’t bankruptcy – it’s math. With 10,000 baby boomers retiring daily and fewer workers contributing to the system, changes will need to be made. But remember, Social Security has faced similar challenges before and survived.

Mistake #3: Automatically Delaying Benefits Until Age 70

One of the most common pieces of advice is to delay taking Social Security until age 70 to maximize your monthly benefit. While this can increase your check by 8% per year after full retirement age, it’s not always the best strategy.

Why? Because your filing decision affects:

• Taxes on your benefits
• Required minimum distributions from IRAs and 401(k)s
• Medicare premiums
• Spousal benefits

Sometimes, taking benefits earlier while delaying IRA withdrawals can result in more net income over your lifetime. There’s no one-size-fits-all answer.

Mistake #4: Misunderstanding Spousal Benefits

Many people falsely believe they can’t claim spousal benefits unless they’re a widow or widower. This misconception causes many to leave money on the table.

Here’s what you need to know: If you’re married, you might be eligible for up to 50% of your spouse’s benefit amount, even if you never worked outside the home. For example, if your spouse qualifies for $2,500 monthly, you could receive $1,250 in spousal benefits at full retirement age.

Even better – if your spouse passes away, you can switch to their full benefit amount if it’s higher than your current payment. This means if you were receiving $1,500 in spousal benefits and your spouse was receiving $2,500, you could step up to the $2,500 amount.

Mistake #5: Relying on the Social Security Administration for Advice

While Social Security Administration employees are dedicated public servants, they’re not financial advisors. In fact, they’re prohibited from giving personalized advice about when you should claim benefits.

The Social Security system includes 2,728 rules in their handbook. With the agency’s staff at its lowest level in 25 years and losing 4,000 employees during the pandemic, getting comprehensive guidance is challenging.

How to Avoid These Costly Mistakes

The key to maximizing your benefits is having a comprehensive plan that considers:

• Your total retirement income sources
• Tax implications
• Medicare costs
• Spousal benefits
• Legacy planning

The B.O.S.S. Retirement Blueprint™ takes all these factors into account. This proprietary planning process helps ensure you don’t become one of the 96% of Americans leaving money on the table.

Taking Action to Maximize Your Retirement Income

Filing for Social Security benefits might be one of the biggest financial decisions you’ll ever make. As retirement income expert Tom Hegna points out, this decision could impact over $500,000 in benefits for singles and more than $1 million for married couples.

Don’t leave this decision to chance. The difference between optimal and sub-optimal claiming strategies could mean tens or even hundreds of thousands of dollars over your retirement lifetime.

B.O.S.S. Retirement Solutions offers a free customized Social Security analysis for those who have saved at least $200,000 for retirement and haven’t yet filed for benefits. This analysis helps you understand:

• The exact timing that could maximize your benefits
• How to minimize or eliminate taxes on up to 85% of your benefits
• Ways to avoid doubling your Medicare premiums
• Strategies to maximize spousal benefits

Why Professional Guidance Matters

When it comes to Social Security, trying to go it alone can be costly. Consider this real example shared by B.O.S.S. Retirement Solutions: A couple recently came in with $2.3 million saved for retirement. They thought they had everything figured out.

However, nearly 100% of their savings was in tax-deferred IRAs and 401(k)s. They hadn’t considered how Required Minimum Distributions would combine with their Social Security benefits to create a massive tax burden. Without proper planning, they were on track to run out of money by age 73.

Here’s why professional guidance from B.O.S.S. Retirement Solutions and Advisors is crucial:

Complex Rules and Regulations

The Social Security system has 2,728 rules in its handbook. These rules interact with other aspects of your retirement plan in ways that aren’t always obvious. A qualified advisor understands these interactions and can help you navigate them successfully.

Tax Implications

Your Social Security strategy isn’t just about maximizing your monthly check. It’s about maximizing what you keep after taxes. Professional advisors can help you:

• Structure your income to minimize Social Security benefit taxation
• Plan for Required Minimum Distributions
• Coordinate between different retirement accounts
• Consider Roth conversions when appropriate

Coordinated Planning

Social Security decisions don’t exist in a vacuum. They need to be coordinated with:

• Your other retirement accounts
• Pension benefits
• Medicare planning
• Estate planning goals
• Tax strategy
• Spousal benefits

Professional advisors look at your entire financial picture, not just isolated pieces.

Avoiding Common Pitfalls

Even seemingly simple decisions can have unexpected consequences. For instance, many people don’t realize that taking benefits early while still working can result in a reduction of benefits. Professional advisors help you avoid these costly mistakes before they happen.

Staying Current

Rules and regulations change regularly. Professional advisors stay current on these changes and can help you adjust your strategy accordingly. They also monitor your plan and can recommend modifications as your circumstances change.

The Bottom Line

Your Social Security benefits are too valuable to leave to chance. While some advisors charge hundreds of dollars for a customized analysis, B.O.S.S. Retirement Solutions offers this service at no cost. Their team has helped over 28,000 families make informed Social Security decisions.

Remember, retiring successfully doesn’t happen by accident. It starts with a plan – the B.O.S.S. Retirement Blueprint™. Don’t risk becoming one of the 96% of Americans who leave an average of $111,000 in Social Security benefits on the table.

To learn more about maximizing your Social Security benefits and avoiding these costly mistakes, contact B.O.S.S. Retirement Solutions today at 800-918-3015 to request your complimentary B.O.S.S. Retirement Tax Savings Analysis. Their team of retirement experts can help you create a comprehensive plan that ensures you get every dollar you deserve from Social Security.