Social Security payments are a crucial source of income for millions of Americans. However, certain actions or mistakes can jeopardize these payments, especially in the upcoming month of May. With the possibility of missing out on benefits, it’s important to understand what could put your Social Security payments in jeopardy. By avoiding common missteps, you can ensure that your payments continue without interruption.
In this article, we’ll go over the top mistakes that could impact your Social Security benefits in May. Keep reading to learn how to protect your payments and avoid the traps that many people fall into.
1. Failing to Report Changes in Your Income
If you are still working while receiving Social Security benefits, it’s crucial to report any changes in your income. Social Security has specific rules about how much you can earn before your benefits are affected.
If you fail to report income increases, you might be overpaid, and you’ll have to pay back the excess amount later. On the flip side, underreporting income can lead to penalties or reduced benefits in the future. Be sure to contact the Social Security Administration (SSA) to update them on any changes, especially if you start a new job or receive additional compensation.
2. Not Taking Advantage of the Right Filing Strategy
Choosing the right time to file for Social Security benefits is key. Many people opt to start collecting their benefits as soon as they are eligible, but this can be a costly mistake. By starting early, you might be locking yourself into a lower monthly benefit for the rest of your life.
It’s important to evaluate your personal financial situation, health, and retirement goals before making a decision. In many cases, delaying your benefits until full retirement age (or beyond) can increase your monthly payments significantly.
If you’re unsure about the best strategy, it’s wise to speak with a financial advisor. The SSA also provides resources on understanding how delaying your benefits affects your payouts.
3. Misunderstanding the Impact of Working While Collecting Benefits
For those under full retirement age who are still working, it’s essential to understand how your income affects your Social Security benefits. There is an earnings limit, and exceeding it will cause a reduction in your benefits for that year.
In 2025, the earnings limit is $21,240 for individuals under full retirement age. For every $2 you earn above this threshold, $1 will be withheld from your Social Security benefits. While the SSA will adjust your payments when you reach full retirement age, failing to keep track of this can lead to a temporary reduction in your benefits.
4. Failing to Set Up Direct Deposit
One of the most common mistakes people make is not setting up direct deposit for their Social Security benefits. Without it, you risk delays in receiving your payments, especially during holidays or unexpected events.
Direct deposit ensures that your payments are deposited directly into your bank account, making them quicker and more reliable. If you haven’t already, now is the time to set up direct deposit with the SSA.
5. Ignoring Medicare Enrollment Deadlines
Another mistake that can affect your Social Security payments is missing Medicare enrollment deadlines. If you’re nearing 65 and approaching eligibility for Medicare, it’s crucial to sign up at the right time to avoid gaps in coverage or penalties that could impact your benefits.
If you’re automatically enrolled in Medicare because you’re receiving Social Security, ensure you review your coverage to avoid unnecessary costs. If you’re not automatically enrolled, you’ll need to sign up during specific enrollment periods to avoid future delays or penalties.
6. Not Keeping Your Records Updated with the SSA
Over the years, your circumstances might change, such as moving to a new address, getting married, or changing your bank account information. Failing to update your records with the SSA can lead to delayed or missed payments.
If you’ve recently moved or have any other changes in your life, it’s essential to inform the SSA so that they have the correct information on file. This ensures that your payments continue uninterrupted, and you avoid any unnecessary complications.
7. Delaying Your Social Security Payments Without a Plan
While delaying your Social Security payments until you reach full retirement age can increase your monthly benefit, it’s essential to do this with a financial plan. Some individuals assume that by delaying, they’ll automatically be financially secure, but this isn’t always the case.
Before delaying your payments, consider whether you can live without the income. If you’re still working and don’t need the money immediately, delaying could work in your favor. However, if you need the funds for daily living expenses, delaying might not be the right choice for you.
Conclusion
Social Security benefits are essential, but they can be affected by mistakes that many people make unknowingly. By understanding these common pitfalls and taking steps to avoid them, you can ensure that your payments remain consistent and reliable. Whether it’s updating your income, choosing the right filing strategy, or staying on top of Medicare enrollment deadlines, staying informed is key to protecting your Social Security benefits.