5 Social Security Mistakes That Could Cost You Thousands

Social Security is one of the most important financial decisions you’ll make in retirement – and unfortunately, it’s one that comes with surprisingly little room for error. The choices you make about when and how to claim can affect your monthly income for the rest of your life. Some mistakes cost a few hundred dollars; others can add up to tens of thousands over time.

Here are five of the most common Social Security mistakes – and how to avoid them.

Mistake #1: Claiming Benefits Too Early

You can begin collecting Social Security as early as age 62, but doing so comes with a permanent reduction in your monthly benefit. If your full retirement age (FRA) is 67, claiming at 62 reduces your benefit by up to 30%. That’s a significant haircut you’ll live with for every year you collect.

On the flip side, each year you delay past your FRA (up to age 70), your benefit grows by 8%. That’s a guaranteed, inflation-protected return that no investment can match. For many people in good health with a family history of longevity, waiting pays off handsomely.

The right claiming age depends on your health, financial situation, and whether you’re married – but “take it as soon as possible” is rarely the best strategy for everyone.

Mistake #2: Not Checking Your Earnings Record

Your Social Security benefit is calculated based on your 35 highest-earning years. If there are errors in your earnings record – wages that were miscredited or missing – your benefit could be lower than it should be.

The fix is simple: create a free account at ssa.gov and review your Social Security Statement. Look for any years where your income appears incorrect or missing. Errors are more common than people realize, especially for those who changed employers frequently or had periods of self-employment.

If you spot a mistake, contact the Social Security Administration with supporting documentation (W-2s, tax returns) to get it corrected. The sooner you catch it, the easier the correction process.

Mistake #3: Forgetting About Spousal Benefits

If you’re married (or even divorced after a marriage that lasted at least 10 years), you may be eligible for a spousal benefit worth up to 50% of your partner’s full retirement benefit. This can be a game-changer for spouses who worked fewer years, earned less, or stepped out of the workforce to raise children.

Many people don’t realize this benefit exists – or assume they can only collect on their own work record. You may be entitled to more than you think, and it won’t reduce your spouse’s benefit in any way.

Divorced spouses can also claim on an ex-spouse’s record as long as you were married for 10 or more years, are currently unmarried, and are at least 62 years old.

Mistake #4: Not Coordinating With Your Spouse

For married couples, Social Security planning is a two-person chess game – and failing to think strategically can cost thousands. A common and effective approach is for the higher earner to delay as long as possible (ideally to age 70), while the lower earner claims earlier.

Why? Because when one spouse dies, the surviving spouse keeps the higher of the two benefits – not both. That means maximizing the higher earner’s benefit is a form of longevity insurance for whoever lives longer.

Claiming at different times requires coordination, but it can significantly boost your household’s lifetime income. A financial advisor who specializes in retirement income can run the numbers for your specific situation.

Mistake #5: Not Accounting for Taxes on Benefits

Here’s a surprise many retirees don’t see coming: Social Security benefits can be taxable. Depending on your combined income (your adjusted gross income plus half your Social Security benefit), up to 85% of your benefits may be subject to federal income tax.

If your combined income exceeds $34,000 (single filers) or $44,000 (married filing jointly), you’ll likely owe taxes on most of your benefit. This matters when you’re deciding how much to withdraw from retirement accounts, whether to do Roth conversions, and how to plan your overall income in retirement.

Some states also tax Social Security income, though many don’t. It’s worth knowing your state’s rules before you finalize your plan.

Key Takeaways

• Claiming at 62 can permanently reduce your benefit by up to 30% – make sure it’s the right choice for your situation.
• Review your earnings record at ssa.gov regularly and fix errors before they affect your benefit.
• Spousal and divorced-spouse benefits can significantly boost retirement income – don’t leave them on the table.
• Married couples should coordinate claiming strategies, often with the higher earner waiting as long as possible.
• Up to 85% of your Social Security benefit may be taxable – plan your retirement income accordingly.

📌 Also See: Medicare vs. Medicare Advantage: Which Is Better for You in 2026? — A complete breakdown to help you choose the right healthcare coverage in retirement.

Recommended Reading: The New Retirementality – a highly rated guide to help you make the most of your retirement.