5 Social Security Mistakes You Probably Don't Even Realize You're Making

Some mistakes in life are costlier than others. Miss a sale on a television you wanted to buy, for example, and you might end up paying $100 more for it, but make a mistake with Social Security, and it might cost you thousands of dollars throughout your retirement.

Here's a look at a handful of common mistakes people make related to Social Security. Learn about them so you can avoid making them yourself.

Image source: Getty Images.

1. Assuming Social Security will provide more income than it will

Here's a big blunder: assuming that Social Security benefits will be generous. Such a misbelief can lead you to save less than you need to for retirement. Here are some sobering facts: The average monthly Social Security benefit, as of February 2023, was just $1,831 -- or about $22,000 for the year. These days, even if you're married in retirement, bringing in $22,000 each, that will likely be far from what you need.

It's true that if you've been an above-average earner in your life, your Social Security benefits will be above average, too -- but they still won't be that much. The maximum monthly benefit was recently $4,555 -- but very few people can qualify for that. Set up a my Social Security account at the Social Security Administration (SSA) website for a clearer idea of what you can expect.

2. Not checking your earnings record

While you're looking at your account on the SSA website, review your earnings history there. The SSA keeps a record of your earnings throughout your working life and bases your benefits on them. If you spot any errors, it's best to have them corrected as soon as possible -- as it might be harder to prove your correct earnings many years later. (Note, too, that there's an earnings cap each year, so if you're a high earner, the record may only show you having earned that sum -- which is $160,200 for 2023.)

3. Not knowing your full retirement age

It's also important to know your full retirement age, which is the age at which you're eligible to start receiving the full benefits to which you're entitled, based on your earnings history. It's based on when you were born:

Source: Social Security Administration. 

4. Not planning for when you'll claim your benefits

You need to know your full retirement age because you are allowed to start collecting benefits before and after it -- as early as age 62 and as late as age 70. An early start will shrink your checks, and a late one will enlarge them. (Remember, though, that starting to collect your benefits early means you'll receive many more checks than if you'd delayed, so it's not as harmful as you might think to start early.)

Still, those who are able to delay should consider doing so -- especially if they stand a decent chance of living a longer-than-average life. Check out the table below to see how much of your full benefits you can expect to collect, depending on when you start the checks rolling:

Source: Social Security Administration. 

So give the question of when to start receiving Social Security some thought.

5. Assuming Social Security won't be around when you need it

Finally, don't let sensationalistic headlines in the media lead you to assume that Social Security is going out of business soon. It's not. It is challenged, though: Over decades, the ratio of workers contributing taxes into the system to beneficiaries collecting money from the system has been shrinking -- due in large part to people living longer and retiring earlier.

Thus, it appears that the surplus that Social Security draws from will dry out within about a decade, and if nothing is done, beneficiaries may collect only about 77% of the benefits due to them. Don't freak out, though, because there's still plenty of time for Congress to rectify the matter, employing one or more of many possible fixes.

The more you learn about Social Security, the smarter decisions you'll likely make regarding it -- and the fewer costly mistakes you'll likely make, too.