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These 3 Moves Will Slash Your Social Security Paycheck

By Maurie Backman - Apr 14, 2021 at 6:49AM

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If you're not careful, you could end up with a lower benefit for life.

How heavily will you depend on Social Security in retirement? The extent to which you do will hinge on different factors, like how much savings you amass by that point.

But either way, you'd probably rather get as much money from Social Security as you can. These moves, however, will have the opposite effect -- they could leave you with less income to enjoy throughout your senior years.

1. Not working at least 35 years

Some people assume that Social Security pays all seniors the same monthly benefit, but that's not how the program works. Your specific benefit is calculated using a special formula that factors in your 35 highest-paid years of earnings.

What this means, though, is that if you don't work a full 35 years, you'll have a $0 added into the mix for each year you go without a paycheck. The result? A lower monthly benefit for life.

Older man with serious expression outdoors

Image source: Getty Images.

If you're nearing the end of your career and you don't have a full 35 years of work under your belt, you have options. First, the simplest one -- stay at your job longer.

But if that doesn't work, you could instead take on a part-time job that will give you some earnings that count toward Social Security. Or you could start your own business and pay yourself a salary, as the earnings you bring in that way could also count as eligible wages for Social Security purposes.

2. Filing before full retirement age

The monthly benefit you're entitled to based on your wage history is only yours to collect in full once you reach your full retirement age, or FRA. Like monthly benefits, FRA isn't universal. Rather, it's specific to your year of birth. Yet in a recent Fidelity survey, 83% of Americans were not able to correctly identify their FRA.

You're allowed to sign up for Social Security starting at age 62, but for each month you file before FRA, your benefits will be reduced on a permanent basis. It's therefore a good idea to learn your FRA, and you can use this table to see what yours looks like:

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

1960 or later


Data source: Social Security Administration.

3. Not correcting mistakes on your earnings record

Each year, the Social Security Administration will issue you an earnings statement that summarizes your wages for the year. If you're 60 or older, it will come in the mail; otherwise, it's accessible online. If any given earnings statement of yours contains an error, like missing income, it could result in a lower monthly benefit, so make a point to read those statements every year and address mistakes that work against you.

The less money you save independently for retirement, the more reliant you'll be on Social Security. But even if you do manage to save nicely, it still pays to get the highest monthly benefit you can.

Avoid the above mistakes so you don't slash your benefits needlessly. You never know how much you might end up relying on them during your senior years.

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