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3 Major Mistakes That Could Shrink Your Social Security Checks

By Christy Bieber – Jan 10, 2022 at 6:55AM

Key Points

  • Maximizing Social Security checks is smart because the income from them is guaranteed throughout retirement.
  • Sometimes, people inadvertently reduce their benefits.
  • It's important to know how your decisions can affect the amount of money Social Security provides.

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Are you at risk of making these income-reducing errors?

Maximizing your retirement income can give you more security later in life. This is especially true of Social Security checks, which are guaranteed to last until you pass on and are protected against inflation. 

Unfortunately, many people inadvertently shrink their checks and reduce this important support source, rather than maximizing it.

There are three common mistakes that could leave you with less Social Security money than you were hoping for, all of which you'll want to be sure to avoid.

A person looking at computer and financial papers.

Image source: Getty Images.

1. Not correcting errors on your earnings record

Your earnings record is the single most important factor in determining how much money you'll get in Social Security benefits. That's because benefits are based on average wages earned during the 35 years your pay was highest after adjusting for inflation.

If your earnings record is incorrect and you don't get credit for all the money you made, benefits will be lower. You can correct mistakes on this record, but you will need documentation, and it's easier to make fixes if you discover the error soon after it was made than if you wait until decades later. That's why it's a huge mistake not to confirm your salary was reported correctly each year.

Fortunately, checking your earnings record is easy. Just sign in at mySocialSecurity, and you can see what the Social Security Administration has recorded for your salary over the course of your career to date. 

2. Enrolling late in Medicare and getting stuck with higher premiums

Signing up for Medicare late can result in a penalty if you don't get coverage as soon as you become eligible. For example, the Medicare Part B penalty can total 10% for each 12-month period you could've had coverage but failed to sign up. 

The longer you wait to get covered, the higher the penalty -- and the added costs last for life. Since Medicare premiums are typically paid directly out of your Social Security checks, higher premiums mean that your retirement benefits will be smaller. Make sure you understand Medicare eligibility rules and key deadlines, so you sign up for benefits on time to avoid this huge mistake. 

3. Working less than 35 years

As mentioned above, benefits are based on average wages over a 35-year period. This raises a key question: What happens if you don't have such a long work history? 

Unfortunately, if you don't have a career that spans 35 years, the Social Security benefits formula still remains the same. You simply end up with some $0 wage years included in your calculation. These can drag down your average wage and result in a smaller monthly benefit.

The only way to avoid this would be to work for the requisite time. Now, you can get benefits even with a shorter work history. You can become eligible after just 10 years of working -- as long as you make enough of those 10 years to earn the maximum "work credits" each year. But the shorter your career, the bigger the impact on your monthly benefit. 

This is definitely the hardest mistake to avoid. But if you're a year or two short, you could simply stay on the job for longer before retiring. Fortunately, it's much easier to regularly check your earnings history and apply for Medicare on time, so you can avoid at least some of these benefit-shrinking moves.

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