Five Factors That Lower Your Social Security Income 

You wouldn’t want to be caught off guard if you were to receive less income than you anticipated. Knowing exactly how much money your Social Security payments will give is crucial if you plan to rely on this after retirement. 

Unfortunately, most seniors overestimate how much money they’ll have in the end, and as a result, many individuals also overestimate Social Security’s ability to sustain them.

Be mindful of these five potential causes that could make you receive fewer payments than expected. You would not want to end up with a financial deficiency due to receiving fewer monthly benefits.

1. Your benefits can be reduced if you file early.

If you already have to file for benefits early, that is one of the main reasons the amount could be less than you anticipated.

Although you can enroll in Social Security at age 62, the longer you wait until you turn 70, the higher your monthly benefit will be. Many people desire to postpone filing for benefits to profit from the increase in income. Still, they frequently find themselves unwilling to do that because they have to stop working earlier than anticipated and rely on Social Security to assist them in getting by.

Hundreds of dollars could reduce the monthly Social Security payout if you are compelled to file an early benefits claim due to health problems, a job loss, or other circumstances that make you leave your employment earlier than anticipated.

2. Your monthly payment is deducted to cover Medicare premiums.

The magnitude of your payment could catch you off guard once you file for benefits because Medicare premiums are typically deducted from your Social Security check.

These premiums provide crucial coverage but will cost about $170 per month in 2022, which may increase in time. Your Social Security payout isn’t huge, but losing $170 or more to Medicare expenses can significantly impact you.

3. Active employment may reduce your benefits.

Last but not least, if you obtain a job to supplement Social Security but have not yet achieved your full retirement age (FRA), which is around 66 and four months old, you could unintentionally cause benefit checks to diminish or entire payments to disappear.

If you continue to work after achieving full retirement age in 2022, you will forfeit $1 in benefits for every $2 earned beyond $19,560. If you work before your FRA but will reach it later in that year, you forfeit $1 in earnings for every $3 earned beyond $51,960.

The Social Security Administration eventually compensates for the benefits withheld due to your excess earnings, and at full retirement age, your monthly payment amount is recalculated. So you gradually get back the benefits you gave up. However, in the meantime, your yearly Social Security benefit may be less than anticipated and may not provide the level of income supplementation you had planned for.

Making more accurate retirement plans can be facilitated by knowing about a possible smaller-than-expected benefit.

4. Self-employment.

The Social Security Administration (SSA) and the Internal Revenue Service (IRS) will require you to record your net earnings if you are self-employed. Your business’s net earnings for Social Security purposes are its gross earnings less all permitted business expenses and depreciation. Here, you’ll find all the forms you’ll need to complete, along with instructions on how to do so. Self-employed people need to be especially careful to ensure that they accurately declare their income because errors could result in a lower benefit and a higher tax bill than you might have anticipated.

5. Gains on investments.

You wouldn’t need to pay any more taxes if your only income was a monthly check from Social Security. However, you’ll probably have to pay taxes on your Social Security benefits if you receive income from other sources, such as dividends, retirement accounts, and other enterprises.

According to IRS regulations, if your income is between $25,000 and $34,000 when filing as an individual, you’ll only be required to pay tax on 85% of your benefits. Up to 85% of your benefits may be taxed for income above $24,000.

Contact Information:
Email: cev@fortunefinancialservices.com
Phone: 7242723902

Bio:
Craig E. Vukich is a 35 year retirement specialist and Financial Advisor who has helped thousands of clients all over the country with their investment portfolios and retirement strategies.
In that time, Craig has also helped seniors and retirees with their Medicare options as healthcare continues to be one of the most confusing issues facing people today.
Personally, Craig lives in Beaver Falls, Pa with his beautiful wife and childhood sweetheart Barb and their lovely daughter Shalyn.
Craig is a graduate of Westminster College which is about an hour north of Pittsburgh. Craig is a recreational golfer and traveler and Pittsburgh sports fanatic.

Disclosure:
This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.

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Craig E. Vukich is a 35 year retirement specialist and Financial Advisor who has helped thousands of clients all over the country with their investment portfolios and retirement strategies. In that time, Craig has also helped seniors and retirees with their Medicare options as healthcare continues to be one of the most confusing issues facing people today.Personally, Craig lives in Beaver Falls, Pa with his beautiful wife and childhood sweetheart Barb and their lovely daughter Shalyn.Craig is a graduate of Westminster College which is about an hour north of Pittsburgh. Craig is a recreational golfer and traveler and Pittsburgh sports fanatic.

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