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3 ways you might slash your Social Security benefits without realizing it

The Motley Fool logo The Motley Fool 11/14/2018 Maurie Backman
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No matter how much money in savings you end up retiring with, there's a good chance you'll look to Social Security to help cover your senior living expenses. But if you're not careful, you could end up reducing your benefits and suffering for it when you're older. Here are three ways you might inadvertently slash your Social Security income -- for life.

1. Not working a full 35 years

Your Social Security benefits are calculated based on your top 35 years of earnings. Not everyone, however, puts in a full 35 years in the workforce. If you took an extended leave for any reason, whether to raise children or care for a loved one in need, you could end up toward the end of your career without 35 years of earnings under your belt. But if that's the case, your retirement income could end up suffering, because for each year of those 35 that you go without earnings on file, you'll have a big fat $0 factored into your personal benefits equation, thereby bringing those monthly payments down.

A better bet? Aim to extend your career if you haven't put in a full 35 years. Doing so will especially help boost your benefits if your earnings have climbed over time and you're making much more at the end of your career than you were at the beginning.

2. Not fighting for raises

Earning more money at your job won't just boost your income at present -- it could also result in a higher monthly Social Security payment when you're older. Therefore, if you don't fight for raises throughout your career, you could end up with lower benefits during retirement.

Of course, negotiating raises is easier said than done, but a good way to go about it is to research your industry, find out what other people with your job title are making, and build a case for why your salary should match or exceed the numbers you're seeing. For example, if you possess certain skills that your peers don't, or your actions alone have saved or made your company money, those are arguments to bring to your boss's attention. And if that doesn't work, you might consider dusting off your resume and taking your talents to another company -- one that will pay you what you deserve.

3. Not checking your earnings record regularly

The amount you collect from Social Security in retirement will depend on your lifetime earnings. But if the Social Security Administration (SSA) has inaccurate information on file, your benefits could end up getting reduced. That's why it's crucial to regularly review your earnings statements from the SSA and immediately report any errors you notice.

Say you earned $65,000 in 2017, but for some reason the SSA has no income on file for you at all that year. If you don't take steps to correct that mistake, you might get a $0 factored into your benefits equation when your monthly payments are calculated. Or, your $65,000 income for that year might get replaced with the $25,000 you earned one year earlier on in your career. Either way, that's not what you want, so be vigilant about checking your earnings record. The SSA won't mail you a yearly statement directly unless you're 60 or older, so if you're not, you'll need to access those documents on its website instead.

The more money you collect from Social Security in retirement, the more comfortable a lifestyle you'll enjoy as a senior. Be sure to avoid the above mistakes to keep one of your most important income streams at a healthy level.

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