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How You Could Lose Your Benefits blog header image

How You Could Lose Your Benefits

Nowadays, many people are very reliant on their retirement benefits that come from Social Security. Having the correct knowledge and information that can help set yourself up for the best situation when it comes to benefits, is exactly what you need and should strive to work towards. That in mind, there are certain things to look out for when preparing. In some cases, there are certain ways in which you could potentially lose your Social Security benefits or even drastically lower them. Let’s dive into it.

To start off, one of the biggest mistakes you can make when it comes to claiming your benefits is doing so at too young of an age. It is advised to claim your benefits when you feel it is the exact necessary and correct time to do so. If not, and you choose to claim benefits earlier, you will end up receiving smaller sized checks in comparison to larger sized if you are to claim later. The range in which you can claim your social security is 62 to 70 years old. That said, claiming at 70 years old is your best bet as your checks will have increased drastically.

When it comes to the IRS, if you are to have too high of an income that is combined with your spouse, you can have a chunk of your benefits lost as well. The income limit for the year 2020 is $137,700. Exceeding the limit can end up costing your benefits to be taxed at around 80%. This is just another example of how important it is to truly educate yourself on the ins and outs of social security benefits. Having your benefits cut drastically by simple mistakes or being misinformed would be devastating to experience. Make sure you understand every step and rule when it comes to claiming your benefits before you do so.

Being aware of the states that are applying social security taxes is just as important. These states include Utah, Vermont, Montana, Colorado, Kansas, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Rhode Island, West Virginia and Connecticut. These states are currently affecting many benefit recipients and cutting back on their total benefit compensation. There is however one state that seems to be distancing themselves from the rest of the group listed above which is West Virginia. The state income tax had received a new signing of a bill that would help eliminate this. If you do not live in West Virginia, but do live in one of the other listed states, one of the best options you could take would be to be physically moving and relocating to another state to avoid this.

Lastly, for those who retire too early and or do not work a plentiful amount of years, please pay attention. Doing so can only hurt you when it comes time to claim your social security benefits. The income you make during your work years are factors that dictate how much in benefits you will receive. 35 years of your income from work that are the highest are calculated to help decide this. Deciding to stop working earlier will drastically reduce your income average that will determine the benefit amount you receive, so remember to keep working until it truly is time to stop. Do not cut it short!