When you begin Social Security is a big decision, and it's difficult to undo later if you decide you've made a mistake, so you want to get it right the first time. Hopefully, you've thought it out carefully and understand how Social Security fits into your larger retirement plan, but it doesn't hurt to review everything one more time before you start receiving benefits.
Here are three things everyone should do before claiming Social Security to avoid accidentally short-changing themselves.
1. Verify the accuracy of your Earnings Record
Your Social Security benefit is based on your average monthly earnings over your 35 highest-earning years, adjusted for inflation. The Social Security Administration tracks the amount of income you've paid Social Security taxes on every year in your Earnings Record, which you can view by creating a my Social Security account.
Check yours over to make sure it's accurate before you begin claiming benefits. If there's been a mistake -- perhaps you forgot to tell the government when you changed your name, or you accidentally wrote the wrong Social Security number on your employment documents -- some or all of your income for a given year may not show up in your Earnings Record. That could cause the Social Security Administration to give you smaller checks than you deserve.
Compare your Earnings Record against your personal records, like tax documents. If you notice an error, fill out a Request for Correction of Earnings Record form and submit it to the Social Security Administration, along with any supporting documents you have. Delay Social Security benefits until this error is corrected.
2. Review how much you'll get
Your Social Security account should also tell you how large your benefit checks will be if you claim at 62, your full retirement age (FRA) -- somewhere between 66 and 67, depending on birth year -- and 70, based on your Earnings Record. Look this information over and see how it compares to what you expected to get from Social Security when you created your retirement plan.
If you're not satisfied with the size of the checks you'll get right now, there are ways to increase them. First, make sure you work for at least 35 years before claiming. Working fewer years than this means you'll have zero-income years factored into your benefit calculation, and that will reduce your checks. Working longer is better if you're able to, because your higher-earning years replace your lower-earning years, resulting in larger checks.
Delaying benefits also increases your checks. Every month you delay Social Security after your 62nd birthday increases your checks until you reach your maximum benefit at 70. So even waiting a few months can make a lasting difference in the size of your checks.
3. Talk it over with your family
If you have a spouse, minor or disabled children, or other family members who may be able to claim Social Security benefits on your work record, you should talk over your decision to begin benefits with them, because when you start claiming can affect the size of their benefits as well.
For example, if you begin claiming benefits before your FRA, you're reducing the size of your own benefit and the benefit your spouse is entitled to if they are claiming benefits on your work record.
Make sure everyone is comfortable with your decision. If you change your mind about beginning benefits, which you can do within 12 months of claiming, you must pay back all the money you've received so far, and those claiming benefits on your work record must also agree to suspend benefits.
You probably can't wait to claim Social Security, but it's not a decision you should rush into. Review the information above carefully and understand how claiming now will affect your lifetime benefit and your family's benefits before you fill out your application.