More than one-third of Americans expect their Social Security benefits to provide a major source of retirement income, according to Gallup. Unfortunately, with average benefits of just $1,404 as of 2018, relying on Social Security won't leave you much cash. This is especially true if you don't know how Social Security works and you take actions that reduce your benefits. 

The decisions you make about when to retire and when to claim Social Security make a huge difference in your retirement income, so be sure to avoid these top three Social Security mistakes.

Social Security card sitting on top of money

Image Source: Getty Images.

1. Claiming at the wrong time

The age at which you claim Social Security benefits will determine how much you receive throughout the entirety of your retirement. The key thing to know is your Full Retirement Age (FRA), which is 67 if you were born after 1960. FRA matters because:

  • If you claim before FRA, you'll receive a reduction in benefits equal to 5/9 of 1% for each of the first 36 months before FRA, and an additional 5/12 of 1% reduction for each prior month. 
  • If you claim after FRA, benefits will continue to increase until age 70. Benefits increase by 2/3 of 1% for each month that you delay. 

The reduction or increase applies throughout your entire retirement. If you claim early and get a reduced benefit, it doesn't increase at 67 when you hit FRA. 

However, if you decide within the first 12 months that you claimed at the wrong time, you can rescind your claim, pay back the benefits received, and be treated as if you'd never claimed at all. Unfortunately, if you began receiving benefits more than 12 months ago, you can't undo your application. You can potentially restore some lost benefits by working. When you work while receiving Social Security before FRA, benefits are reduced. The SSA will factor this reduction in and recalculate your benefits amount when you reach FRA.

It's important to fully understand the implications of claiming early or late because the difference could be thousands of dollars per year, as shown by this chart illustrating how an average Social Security benefit of $1,404 would be affected. 


Change in Benefits Compared to FRA

Monthly Benefit Amount


30% reduction



25% reduction



20% reduction



13.3% reduction



6.7% reduction



No change



8% increase



16% increase



24% increase


Table calculations: Author. 

While delaying may seem smart to increase your income, you'll have to consider years of foregone benefits. To calculate your break-even point -- the point at which higher benefits from claiming late make up for lost years of benefits -- add up all of the payments missed by filing late and divide this by the extra monthly money received due to delaying. 

When you've received benefits for that number of months, you'll have made up for missed payments, and every higher benefit after that date is extra Social Security income an early claim would have caused you to miss. 

2. Not working long enough

Social Security benefits are based on wages while working. The Social Security Administration uses a formula to calculate benefits based on your highest 35 years of earnings, with wages adjusted to reflect wage growth. If you haven't worked for 35 years, Social Security will factor in zeros for each year missed. 

This could make a big impact in how much your benefits are. Compare a person who made the equivalent of $45,000 throughout an entire 35 year career to a person who made the equivalent of $45,000 throughout their career, but worked just 25 years.

For the first worker, Social Security benefits would be based on a $45,000 per-year salary. For the second worker with 10 years of zero wages averaged in, benefits would be based on a $32,142 salary. This could reduce Social Security benefits substantially, although not by as much as the reduction in wages because of the progressive nature of the calculation. 

3. Not coordinating with your spouse

Social Security is much more complicated for married couples than for singles because a person who's single must claim benefits on their own work record. Those who are married -- or individuals married for at least 10 years before divorcing -- may be eligible to claim benefits on a spouse's work record.

If you can claim benefits on your spouse's record, you'll need to evaluate all of your options. There are actually 81 different claiming strategies, two of which include: 

  • Having the higher-earning spouse claim benefits as soon as possible so a lower-earning spouse can also get benefits on their record. 
  • Having a lower-earning spouse claim benefits first so the couple has money to live on while the higher earner delays and allows benefits to grow as much as possible.

You can read about different Social Security claiming strategies to find out which option makes the most sense. It may also be worth talking with a financial advisor who specializes in Social Security to decide how best to claim benefits as a married couple. 

You can avoid Social Security mistakes

For 50% of married couples and 71% of singles, Social Security provides at least 50% of retirement income, according to the Social Security Administration. Since Social Security is such a major source of money during retirement, it's worth taking the time to learn about how it works.

By getting your top Social Security questions answered and making sure you claim benefits at the correct time, you can get as much money as possible from Social Security to help you fund a secure retirement.