retirement

Don't fall into these Social Security traps

6 Social Security traps to avoid
6 Social Security traps to avoid © Lisa S./Shutterstock.com

If you're looking forward to turning age 62 so you can begin collecting Social Security benefits and live on Easy Street, you might get caught off guard. Some of the Social Security rules can be frighteningly complex. Because it will likely represent a large portion of your retirement income, it's important to understand how the government program works.

For instance, there are limits on how much you can earn while collecting benefits, and if you exceed those limits, your Social Security benefits will get cut substantially. That's just one of the snares that could trip you up.

Make sure you plan appropriately to avoid these six Social Security traps.

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Social Security is a great government program that enables retirees to avoid living in poverty. Before collecting Social Security benefits at age 62, it's best to bone up on the kinds of things that might trip you up.

If you plan to continue working into your 60s, be aware that your benefits may be forfeited or taxed. For example, if your earnings exceed a certain level, up to 85 percent of Social Security benefits may be taxable.

Also, you may end up forfeiting some Social Security benefits if you collect the benefit while you work. For example, if you earn more than $15,120 this year, your Social Security benefits will be reduced by $1 for every $2 you earn above that level.

So if you're planning to work, you might want to hold off on collecting Social Security at least until full retirement age, after which you can earn as much as you want without losing any benefits. But you still might be taxed.

 

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