Americans Lose More Than $100,000 In Social Security

Small mistakes while filing for Social Security routinely lead to Americans losing $100,000 or more.

According to Forbes, 96 percent of Americans lose an average of $111,000 in their Social Security income due to errors made while filing for benefits.

Because the Social Security handbook contains a whopping total of 2,728 rules, it's easy for retirees to end up regretting their filing decision. And if they make one mistake filing, it will follow them throughout the rest of their retirement.

For instance, while most believe that delaying benefits is always the best way to get the most amount of money, benefits only climb by 8 percent every year when delayed. And for some people, they'll end up losing plenty of cash during the years they're still alive based on how this affects taxes and other benefits.

And while Social Security funds are set to be depleted by 2032 under current estimates, some are suggesting a less conservative approach to waiting for the highest benefits in the future, since uncertainty still surrounds the SSA's continued existence.

But even ignoring these potentially problematic mistakes, there's a far more common one, according to Glenn Sanger-Hodgson, a financial planner at Shonan Gold Financial. Many retirees never go to SSA.gov and estimate their benefits at all before taking the leap and filing for their payments.

"I recommend taking a look at least once per year, but some folks plunge right into retirement without ever having looked at this document," Sanger-Hodgson told Newsweek. "The key thing to look for is the record of your past earnings, as this is what your benefits are calculated on."

If there's any error on your report, you can also submit a correction request, and this is vital if you want to take in the heftiest Social Security paycheck possible.

Beyond that, many seniors end up filing too soon or neglecting to understand how spousal benefits work, said Chris Hensley, a financial advisor and president of Houston First Financial Group.

Spousal benefits, for one, mean you can earn 50 percent of your spouse's benefit in place of receiving your own Social Security benefit. If, say one spouse stayed at home to raise the children, there could be a huge discrepancy between the partners' earnings and subsequent Social Security benefits, so this rule is meant to help stay-at-home parents during old age.

But sometimes, simple confusions lead to devastating financial consequences too.

"I've seen cases like one here in Texas where a teacher lost out big time due to a mix-up at the Social Security office," Hensley told Newsweek. "The clerk asked them if they participated in TRS, the state pension, but didn't ask the follow-up question 'Does your employer currently participate in Social Security as well?'"

Due to this, the teacher ended up getting penalized with the Windfall Elimination Provision and Government Pension Offset due to a mere misunderstanding.

"It's a mess and is currently under appeal," Hensley said. "To dodge these pitfalls, clear information and sometimes professional advice can be a lifesaver. The complexity of Social Security makes it about as clear as mud to most people."

While there might not be one way to fully get your Social Security filing right just because you can't predict exactly when you'll die, there are still certain pieces of information seniors know before they make a final decision on how and when to file.

For one, working a full 35 years is always the best choice because Social Security takes income from your top 35 years of earnings.

Even if you are no longer able to work in a high-paying, high-stress job, Tyler Meyer, financial planner and president at QED Wealth Solutions, said seniors should consider finding a job that still gives them the lifestyle they want so they can cash in a higher amount.

"Finding a lower-paying or part-time job that is less stressful can be a great solution if you do not have a full 35 years of working history," Meyer told Newsweek. "Erasing just a few years of $0 income and replacing them with even a small amount can make big headway in increasing your benefits."

Americans' full retirement age remains between 66 and 67 depending on what year they were born, but this doesn't always mean you should immediately file for benefits then, either. Depending on your health and work situation, you could see a far higher payout by waiting until age 70.

Each year beyond your full retirement age, your benefit will increase by 8 percent, but this option only makes the most sense if you're in good health, experts say.

"If you waited until age 70 to claim, the benefit could be $29,760 per year. In this case, claiming at age 67 would result in $115,200 less in total benefits compared to claiming at age 70," Drew Parker, the creator of The Complete Retirement Planner, told Newsweek.

"You could make the point that claiming earlier than age 70 will result in 'losing' potential Social Security income, but making that choice can depend on many circumstances and everyone's decision should be based on their personal financial situation and needs."