Social Security benefits are an important pillar of many retirement plans, but unfortunately too many retirees make mistakes that lead to less money when they need it most. In my experience, retirees and near retirees are largely unaware that a lack of Social Security benefit planning harms their financial future. Don't worry, being smart about Social Security is easier than you might think. You just have to keep in mind a few strategies and you'll be on your way to a better retirement. Here are some mistakes to avoid.

Claiming Benefits Too Early

There are really only a few circumstances in which you should take out Social Security benefits before your full retirement age or before the age of 70. One of those circumstances is if you're in poor health. If, unfortunately, you don't believe you'll live up to your peers’ life expectancy age, it might be more advantageous to take benefits early so you can earn more money during the time you have left to live. Another circumstance in which you might want to take benefits early is if you badly need the money. You should never delay Social Security benefits if you don't have other means to put food on the table. (For more, see: Tips on Delaying Social Security Benefits.)

Other than those unique circumstances, it's probably a mistake to claim your benefits early. If your full retirement age is 67 and you start taking retirement benefits at age 62, for example, you're going to see your benefits drop by 30%, according to the Social Security Administration. Ouch. Every year thereafter you wait to take your benefits up until your full retirement age, there is less of a drop – but it still isn't pretty. In fact, every year you wait to take your retirement benefits after your full retirement age up until age 70, you'll receive higher monthly payments than you would have otherwise. “Delaying Social Security can add as much as 32% if you wait until age 70,” says Carlos Dias Jr, founder of Excel Tax & Wealth Group in Lake Mary, Fla.

There are also repercussions to consider in taking your benefits early if you are still working, says Steven Hennessy, founder of Trinity Financial Services in Miami, Fla. “In 2016, your Social Security check will be reduced by $1 for every $2 in earnings that exceed $15,720. For example, your earnings might reduce your annual benefit of $18,000 to $12,000. And unfortunately, benefit reductions are not taken a little at a time over the year. Instead, they are taken upfront. So, for example, a $1,500 monthly benefit ($18,000 a year) would not be reduced to $1,000 ($12,000 a year) for an entire year. Instead, you would get no Social Security payment for four months ($1,500 per month x 4 mo. equals $6,000), then the $1,500 payment for 8 months. Not good for the budget.”

Think twice before taking retirement benefits early.

Preparing for the Wrong Retirement Age

Don't assume you know your full retirement age unless you look at this chart. Full retirement age varies depending on the year of birth. For example, if you were born in 1937 or earlier, your full retirement age is 65. If you were born in 1942, your full retirement age is 65 and 10 months. If you were born in 1960 or later, your full retirement age is 67. (For more, see: Why Retiring Sooner Might Be a Bad Idea.)

Remember, even these facts are subject to change. Social Security has been struggling in recent years, and there has been talk in Washington, D.C., about raising the full retirement age. Simply put, people are living longer than in recent years, the Social Security Trust Fund is being depleted and there are serious problems with the program that must be overcome. Raising the full retirement age is one of several proposed solutions, so keep an eye on SSA.gov to discover your full retirement age as you near retirement. Preparing for the wrong retirement age can have devastating consequences on your long-term financial health. Don't make this mistake.

Not Diversifying Retirement Income

You should never, ever, allow your Social Security benefits be your only source of income. This is perhaps the worst mistake to make – and it will certainly cost you.

“To give an example, the maximum annual Social Security benefit for someone retiring at full retirement age in 2016 is $31,668. If you were making $100,000-plus throughout your career and you didn’t save a penny, then you are going to see a significant reduction in your standard of living, which most people don’t want,” says Mark Hebner, founder of Index Fund Advisors, Inc., in Irvine, Calif.

Instead, especially if you're younger, it is better to pretend Social Security benefits don't exist and that you'll have to fund your retirement on your own. There is some question as to whether Social Security benefits will exist for younger generations or whether they might be reduced compared to now – so don't bet on Social Security to secure your retirement. (For more, see: Can Young Workers Rely on Social Security?)

There are a number of additional ways to your retirement. One is to invest for a retirement. You can put your money in a Roth IRA, IRA or 401(k), for example. Another way is to buy rental properties to have rental income every month. Yet another is to create a self-sustaining business that pays long after you've retired. Just don't leave your retirement entirely up to the Social Security Administration.

The Bottom Line

Social Security benefits are an important part of many retirement plans. Avoid these expensive mistakes, and you're much more likely to enjoy the retirement you've always wanted. (For more, see: Maximize Your Social Security Benefits.)

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