Retirement in the United States is an enormously important time for its citizens. Claiming Social Security and starting to collect their paychecks means stopping work in most cases. For that reason, retirees often take a break when this time comes. That is the main reason for Social Security. Despite this, there are many pensioners who make mistakes, especially when they retire too early.
Thus, applying for Early Retirement Age (ERA) at age 62 is a great option, but you have to watch out. By doing this we are going to lose about 30% of our Social Security check. This means, therefore, that if our contributed benefit is $1,000, we will receive $700 every month. The rest we will never be able to collect, since we have applied for early retirement.
Mistakes in applying for Social Security too early
These three mistakes are very common among early retirees. Some of the mistakes are fixable, but there is one that is not. You need to think very carefully about when to apply for Social Security before you take the last step. Let’s take a look at these three mistakes:
- Overspending: Spending more than we have is very common. When we work, our purchasing power is usually great. However, at the time when we collect Social Security alone, we are likely to have much less money. Therefore, overspending is a very bad idea. We must control our finances very well in retirement, as our money is very limited.
- Claiming too early: Applying for the ERA is tempting, but sometimes it is very counterproductive. If you want to collect a good monthly Social Security check, it is much better to wait until you turn 65. This will make you collect a little more and, in addition, you will already have Medicare available. Therefore, it will be an extra savings.
- No thinking about longevity: Life expectancy is different for everyone, but you have to take that into account as well. Claiming a retirement benefit too late can be a mistake with a short life expectancy. On the other hand, we should think about longevity as something positive and therefore wait to apply for social security a little later.
In short, these mistakes are easy to correct, especially if you have not yet applied for your retirement benefit. If you have already applied, try not to spend more money than you have and keep a close eye on your finances. If you can save some money with longevity in mind, your situation will be much easier. And don’t forget that you can check the status of your Social Security benefit through the My Social Security website.