Planning for Social Security benefits is one of the most important steps in securing a stable retirement. However, many retirees make critical mistakes that reduce their lifetime benefits by thousands of dollars. Understanding how to maximize Social Security and avoid costly errors can help you secure your financial future.
Here’s a look at the biggest Social Security mistake retirees make and how you can avoid losing thousands in retirement benefits.
The Costly Social Security Mistake: Claiming Benefits Too Early
One of the most common and expensive mistakes people make is claiming Social Security benefits too early—at age 62 instead of waiting until full retirement age (FRA) or later.
- While 62 is the earliest age you can start receiving benefits, your monthly payments will be permanently reduced by up to 30% compared to waiting until FRA.
- If you wait until age 70, your benefits can increase by up to 8% per year due to delayed retirement credits.
For example:
- If your full retirement benefit at 67 is $2,000 per month, but you claim at 62, you may only receive $1,400 per month.
- Over a 20-year retirement, this could mean losing over $144,000 in total benefits.
Why Claiming Early Can Be a Costly Mistake
1. Permanent Benefit Reduction
Social Security penalizes early claimers with a permanent reduction in benefits:
- Claim at 62: Get only 70-75% of your full benefit.
- Claim at 67 (FRA): Get 100% of your benefit.
- Claim at 70: Get 124-132% of your benefit.
This means waiting just a few years could significantly increase your monthly checks for life.
2. Higher Lifetime Earnings Potential
- If you live into your 80s or 90s, delaying benefits maximizes your lifetime Social Security income.
- For retirees in good health, delaying benefits can lead to tens of thousands of dollars more in total payments.
3. Spousal and Survivor Benefits Impact
- If you claim early, your spouse’s survivor benefits will also be permanently reduced.
- This could affect your partner’s financial security after you pass away.
Exceptions – When Taking Social Security Early Might Make Sense
While waiting is often beneficial, there are cases where claiming early could be the right move:
✅ Health Issues – If you have a shorter life expectancy, claiming early may be a better option.
✅ Financial Need – If you can’t afford to wait, early benefits may help cover essential expenses.
✅ No Dependents or Spouse – If you don’t need to worry about spousal benefits, early claiming may not have as much of an impact.
How to Avoid This Costly Mistake
1. Know Your Full Retirement Age (FRA)
Your FRA depends on your birth year:
- Born 1943-1954: FRA is 66
- Born 1955-1959: FRA is 66 + a few months
- Born 1960 or later: FRA is 67
2. Work Longer If Possible
- Every additional year you work helps you earn higher lifetime benefits.
- Social Security calculates payments based on your highest 35 years of earnings.
3. Consider Delaying Until 70
- Every year past FRA increases benefits by 8% per year, up to age 70.
- This could result in thousands more in lifetime benefits.
4. Plan for Taxes on Social Security
- If you claim early and continue working, your benefits may be taxed or reduced due to earnings limits.
- In 2025, if you earn more than $22,320 while receiving early benefits, part of your Social Security may be withheld.
5. Consult a Financial Advisor
- A retirement expert can help determine the best time to claim benefits based on your financial situation, health, and goals.
Conclusion
Claiming Social Security too early is a costly mistake that can reduce your lifetime benefits by thousands of dollars. While taking benefits at 62 may be tempting, waiting until full retirement age (or later) can provide significantly higher monthly checks and better financial security.
To maximize your Social Security income, carefully plan your claiming strategy, consider your health and financial needs, and seek professional advice. A well-planned decision can ensure a more comfortable and stress-free retirement.
FAQs
1. What is the best age to claim Social Security?
The best age depends on your health, finances, and goals. Generally, waiting until full retirement age (FRA) or age 70 leads to higher monthly benefits.
2. How much will I lose if I claim Social Security at 62?
If you claim at 62, your benefits could be reduced by up to 30% compared to waiting until FRA (66-67).
3. Can I change my Social Security claiming decision?
Yes, you can withdraw your application within 12 months and repay benefits received. Otherwise, you can suspend benefits after FRA to earn delayed credits.
4. What happens if I claim early and keep working?
If you work before FRA, some benefits may be withheld if you earn more than $22,320 (2025 limit). However, benefits are recalculated at FRA to recover lost amounts.
5. How do I maximize my Social Security benefits?
To get the most from Social Security:
✅ Work for at least 35 years
✅ Delay benefits until age 70 if possible
✅ Coordinate spousal benefits
✅ Plan for taxes and Medicare costs