5 Social Security Mistakes That Could Cost You Thousands

Social Security represents one of the most significant retirement income sources for most Americans. Yet many people make costly mistakes when claiming their benefits. Understanding these pitfalls can help you maximize your lifetime benefits.

1. Claiming Too Early

While you can start receiving Social Security benefits at age 62, doing so reduces your monthly benefit by up to 30% compared to waiting until your full retirement age. For those born in 1960 or later, full retirement age is 67. Each year you delay beyond 62 increases your benefit.

2. Not Considering Spousal Benefits

Married couples have options that single individuals don't. A spouse can receive up to 50% of their partner's benefit amount if it's higher than their own earned benefit. Coordinating when each spouse claims can significantly impact total household income over retirement.

3. Ignoring the Earnings Test

If you claim benefits before full retirement age and continue working, your benefits may be reduced based on your earnings. In 2026, if you earn more than $22,320 (this amount adjusts annually), $1 is withheld for every $2 you earn above the limit.

4. Forgetting About Taxes

Many retirees are surprised to learn that Social Security benefits can be taxable. If your combined income exceeds certain thresholds, up to 85% of your benefits may be subject to federal income tax. Strategic retirement income planning can help minimize this tax burden.

5. Not Reviewing Your Earnings Record

Your Social Security benefit is calculated based on your 35 highest-earning years. Errors in your earnings record can result in lower benefits. It's crucial to review your Social Security statement regularly and report any discrepancies promptly.