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3 Reasons You Might Get Less Money Out of Social Security Than Expected

By Maurie Backman – Sep 10, 2018 at 1:04AM

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Counting on Social Security? These moves might set you back financially.

Millions of older Americans count on Social Security to pay the bills later in life. But if you're not careful, you could end up with far less money from Social Security than you might have initially anticipated. Here are three reasons why your benefits might come in lower than expected -- and what to do about them.

1. You're planning to file before your full retirement age

Your Social Security benefits are based on your earnings history -- specifically, your top 35 working years. But the age at which you file for benefits could cause them to go down. For each year you file ahead of full retirement age, or FRA, your benefits will be reduced by a certain percentage, up to a maximum of 30% (assuming your FRA is 67 and you file at the earliest possible age of 62).

Older man looking at a laptop with a concerned expression.


Here's what full retirement age looks like depending on the year you were born:

Year of Birth

Full Retirement Age




66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months




Let's say your earnings record entitles you to $1,500 a month at an FRA of 67. If you file at 62 instead, you'll knock your monthly benefits down to $1,050. Worse yet, that reduction will remain in effect for the rest of your life (unless you withdraw your application for benefits and repay the full amount you collect within a year of claiming).

Now if you happen to find yourself in a situation in which you need money immediately -- say, you've lost your job or encounter a series of costly medical issues -- then you may have no choice but to file for Social Security before reaching FRA. Otherwise, know when you're entitled to collect your benefits in full, and aim to hold off until FRA before pulling the trigger.

2. Your earnings history is inaccurate

As stated above, your Social Security benefits are based on your income during your top 35 years of earnings. But if the Social Security Administration (SSA) has erroneous information on file, you could end up losing out.

Imagine you earned $85,000 your last year on the job, only for some reason, the SSA only has $48,000 on file. It's odd, but it could happen. Similarly, the SSA might have gaps in your work history so that it only has you down as working for 32 years instead of 35. If that's the case, you'll get $0 factored into your personal benefits calculation for three years, thereby bringing down the total amount you're entitled to collect.

To avoid losing money to what could be nothing more than an administrative glitch, be vigilant about checking your earnings record and report any mistakes you find to the SSA as soon as you spot them. Keep in mind that the SSA won't send copies of your earnings statements unless you're 60 or older, so if you're younger than 60, you'll need to create an account on the SSA's website and review them there.

3. You're aiming to work and take benefits simultaneously

Though you're allowed to work and collect Social Security at the same time, you should be aware that if you do, you risk having a portion of your benefits withheld depending on how much you earn. For the current year, your first $17,040 in income is exempt from what's known as the Social Security earnings test. Beyond that, however, you'll lose $1 in benefits for every $2 of earnings you bring in so that if you earn $18,040 a year, you'll have $500 in benefits withheld.

That said, if you'll reach FRA later this year, your first $45,360 of income is exempt from the earnings test. After that, you'll lose $1 in benefits for every $3 you earn.

Keep in mind, however, that the above rules only come into play if you haven't yet reached FRA. Once FRA kicks in, you can earn as much as you'd like and it won't impact your benefits whatsoever -- which is yet another good reason to hold off on filing until that point. Another thing you should know is that whatever money is withheld from your Social Security payments initially will be added back once FRA hits. In other words, you're not losing that money forever -- you're just not getting it right away.

If you're counting on Social Security to provide a sizable portion of your income, then be sure to read up on the program's various rules. The more you know about Social Security, the greater your chances of getting the most money possible from it.

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