For most Americans, Social Security is the backbone of retirement income. However, despite its importance, many people make expensive mistakes unconsciously to reduce monthly benefits, trigger unexpected taxes or create long-term financial stress. On the surface, Social Security may seem simple, but under the hood, it’s a complex system full of rules, deadlines and exceptions that even the most crafty retirees can trip over.
You might think you are safe or “doing what everyone else does”, but that’s exactly the expensive supervision. From claiming to being too early to underestimate the impact of retirement work, there are seven mistakes you may make with Social Security benefits, not even realizing it.
Error 1: Claiming benefits too early
It’s tempting to start collecting social security once you’re 62 years old, especially if you’re no longer working. But claiming that early means permanently lowering interests. For each year before your full-year retirement age (range 66 to 67 years, depending on your year-on-year birth), your monthly checks can be reduced by up to 30%.
A smaller number will not only affect you—if you die, it will also affect your spouse’s survivor welfare. Unless you really need an immediate income, waiting until the age of full retirement, or even delaying to 70, will greatly increase your lifelong benefits.
Error 2: Underestimate the earnings limit
If you require Social Security and continue working before your entire retirement age, you may lower your income if your income exceeds a certain threshold. In 2025, the limit is $22,320. For every $2 you earn limit, your benefits will be withheld $1.
Many people mistakenly believe that they can “double immersion” by working full-time and collecting benefits early. However, if your income is too high, your payments may be cut and just need to be recalculated. While the amount withheld can eventually be paid back from the full retirement age, the short-term losses can be surprising and financially inconvenient.
Error 3: Ignore the benefits of spouse and survivors
Spousal welfare is one of the most misunderstood aspects of social security. If you are married, divorced, or widowed, you may be eligible for benefits based on your spouse (or former spouse) work record, even if you have never worked.
Many retirees do not coordinate a couple’s welfare strategy and leave money on the table. For example, in a two-income household, it may be better for lower-class earners to claim earlier, while higher-income earners delay maximizing survivor benefits. Know how the job of knowing the rules of spouse and survivors can have a significant impact on your family income.
Error #4: Assuming benefits are not taxable
Yes, Social Security benefits can be taxed, with 85% of your income depending on your total income. This surprised many retirees who thought their Social Security payments would be tax-free.
If your “consolidated income” (including your adjusted gross income, non-deserved interest and half of Social Security benefits) exceeds certain thresholds ($25,000 in individuals), or $32,000 for couples – you can tax a large portion of your benefits. Poor planning can push you to higher tax rates, so it’s important to take that into account in your retirement income strategy.
Error 5: Not reviewing your income record
Your Social Security Benefits are based on your first 35 years of income. But what if these revenue reports are reported incorrectly, or are not reported at all?
The Social Security Bureau will not automatically verify your income. It is up to you to decide on your income record and report any errors. If you don’t catch them in time, you may lose it with thousands of benefits in your life. Establish the habit of checking your annual Social Security Statement to confirm that your work history is accurate.
Error #6: Think you are “too rich” to care
Even high-income earners sometimes underestimate the importance of social security. They can assume that their retirement account will cover everything, so they request it early or make uninformed decisions. But with the continued focus on longer lifespans and market volatility, Social Security provides what other sources of income provide: guaranteed, inflation-adjusted lifetime payments.
Maximizing this benefit is not only for those who have limited savings. This is smart risk management for any retirement plan. Just because you can afford it feels like putting money on the table, hence getting rid of higher lifelong benefits.
Error 7: Action alone without professional guidance
Social security may be a government plan, but requires personalized strategies. Your ideal requirement decision depends on your health, income needs, marital status and long-term goals. However, many retirees make decisions based on rumors, outdated rules or intuition.
Talk to a financial advisor, especially someone who understands Social Security Optimization, can help you avoid expensive mistakes. A method that fits all methods simply doesn’t work, and even small tweaks to your plan may increase over time.
Final Thought: The Cost of Making a Mistake
Social Security may be like another checkbox on your retirement to-do list, but it’s a key part of your financial foundation. Even making one of these common mistakes can reduce your interests, increase taxes, or make your spouse less income in the future.
Fortunately, these mistakes are preventable. With the right knowledge and some plans, you can maximize your income, protect your family, and make sure your benefits work for you, not against you.
Have you asked for social security or are you still weighing your choices? What factors are shaping your decision?
Read more:
9 Social Security Assumptions That Will Spend You Thousands of Dollars
Why social security is not enough, even if you think you are ready
