An important thing to remember about Social Security is that it’s basically a retirement savings investment. In this case, the investment was the time you put in working and the Social Security taxes you paid along the way. As with any investment, you can get good and bad advice about Social Security from financial professionals.
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There is no single right strategy to maximize your Social Security benefits because so many variables are at play. These range from your personal retirement savings and debt load to your health, family situation and desired lifestyle in retirement. Financial advisors need to tailor their advice so that it fits each unique situation. Unfortunately, not all do that — and it could cost you money.
Here are four ways financial advisors get Social Security wrong.
Advising You To Claim Too Early
You can begin claiming Social Security retirement benefits as early as age 62, and some advisors suggest taking it as soon as possible and putting that money into investments. However, most seniors are better off waiting because the longer they wait, the higher their monthly payments will be.
Social Security benefits should be viewed as a steady source of lifetime income rather than an investment opportunity. As financial guru Suze Orman wrote in a blog last year, “A Social Security payout that will be 76% higher if you wait until age 70 to start can be awfully helpful if you indeed have a longer life.”
Read More: Suze Orman: 5 Social Security Facts Every Soon-To-Be Retiree Must Know
Advising You To Claim Too Late
Conversely, it’s not always best to wait as long as possible to file for Social Security benefits. For example, if you have high debt or medical expenses that need to be dealt with immediately, you are probably better off claiming Social Security early so you can get those bills and issues dealt with. Otherwise, you might end up paying more on the debt or medical condition than you’d gain by waiting to claim.
That’s why it is important for advisors to tailor their strategies to individual cases rather than go by general rules.
Not Taking Longevity Into Account
Financial advisors who don’t consider how long you might live can make a big financial mistake.
For example, if you are expected to live a long time, such as into your late 80s or 90s, then you should wait to claim benefits because you will eventually get more money that way. However, if you have a short life expectancy, then there is no reason to wait because doing so will cost you money.
Suggesting That Social Security Will Run Out of Money
One of the biggest concerns about Social Security is that its Old-Age and Survivors Insurance Trust Fund is due to run out of money within the next decade. When that happens, the program will lose about 23% to 25% of its current funding.
But even when the fund is depleted, payments won’t stop completely because payroll taxes still fund at least three-quarters of the program. Rushing to claim benefits early out of fear that Social Security is going broke is another mistake that can cost you in the long run.
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This article originally appeared on GOBankingRates.com: Social Security: 4 Ways Financial Advisors Get It Wrong and Cost You Money
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