Longing for those retirement years is a common feeling, but lack of planning can have some unintended consequences. Do you know when the best time is to file for Social Security? If you're not sure, you're in good company. Each day, another 10,000 Baby Boomers reach retirement age, and many immediately file for their Social Security benefits. What many don't realize is that this could be a costly mistake and proper financial planning can place you in a better long-term position.
Common Misconceptions About Social Security
Even if you've been given information about your benefits eligibility by the Social Security Administration, a recent investigation by the Government Accountability Office (GAO) has found that you might want to question some of that data. The GAO found that the average consumer, whether they received their information over the phone or online, didn't have a strong grasp of Social Security eligibility, which often led them to make the wrong choices.
For example, many retirees don't understand the full implications of claiming Social Security benefits at age 62 versus waiting until full retirement age, which is generally 66. If you took benefits at the earliest possible time, they'd be 25 percent less than if you'd waited. Also, many retirees aren't aware of the tax implications of Social Security benefits or the effect that having a "retirement job" will have on their benefits.