12 Common Social Security Mistakes -- and How to Avoid Them

Retirement costs a lot of seniors over $1 million these days, and Social Security can go a long way toward helping them cover their expenses. But too often, people end up shortchanging themselves because they don't understand how the government calculates their benefits.

If you're trying to get the most out of the program, you need to avoid the following 12 mistakes.

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If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Your earnings record lists the amount of money you've paid Social Security taxes on every year. That's not always the same as your income. In 2021, you only pay Social Security taxes on the first $142,800 you earn. The Social Security Administration gets this information straight from the IRS, so it's usually accurate, but sometimes errors happen. The worst-case scenario is your income doesn't show up for a year you've worked.

You can avoid this by checking your earnings record annually through your my Social Security account. If you notice anything off, submit a Request for Correction of Earnings Record form to the Social Security Administration, along with documentation of your income for the year.

ALSO READ: 3 Ways to Score an Even Bigger Social Security Check

Your Social Security benefit is based on your average monthly income over your 35 highest-earning years, with adjustments for inflation. You only need to work 10 years to qualify for benefits, but if you don't have at least 35 years of work on your record, you'll have some zero-income years factored into your calculation. This will significantly reduce your benefit amount.

Working longer than 35 years has its perks if you're earning more later in your career than you did starting out. Your more recent, higher-earning years will begin to replace your earlier, lower-earning years, resulting in a larger benefit.

Because your Social Security benefit is based on your income during your working years, anything you do to increase your income today will help your benefits tomorrow. That assumes you're not already earning more than $142,800 in 2021.

There are several ways you could try to increase your income, including switching employers, pursuing promotions, starting a side hustle, or working overtime. Think about which strategies would work best for you and try to put them into practice.

If you want the full benefit you're entitled to based upon your work record, you must wait until you reach your full retirement age (FRA) to sign up. That's 66 for those born between 1943 and 1954. Then, it rises by two months every year thereafter until it reaches 67 for everyone born in 1960 or later.

You can sign up before your FRA, but you'll get smaller checks if you do so. Conversely, delaying benefits past your FRA increases your checks until you reach your maximum benefit at 70. It's a good idea to consider a variety of starting ages before deciding on the best time for you to sign up. Your Social Security account has a benefit calculator that can help with this.

ALSO READ: 4 Ways to Boost Your Social Security Benefits by Hundreds of Dollars per Month

If you sign up right away at 62, you'll only get 70% of your full benefit per check if your FRA is 67 or 75% if your FRA is 66. It can still be a smart move if you don't believe you'll live past your 70s or you need the money to cover your living expenses. But otherwise, it's usually better to delay a little while.

Every month you delay increases your checks slightly and can increase your lifetime benefit. However, if you choose to delay, you have to be prepared to cover your expenses on your own until you're ready to sign up.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

You qualify for your maximum Social Security benefit at 70. This is 124% of your full benefit if your FRA is 67 or 132% if your FRA is 66. Your checks won't get any bigger if you delay benefits past this point, so you shouldn't wait any longer to sign up.

ALSO READ: 3 Things You Must Know Before Claiming Social Security

Seniors claiming Social Security while working could lose some of their benefits to the Social Security Earnings Test if they are under their FRA. The Social Security Earnings Test takes $1 from your benefit for every $2 you earn over $18,960 in 2021 if you'll be below your FRA for the full year. If you'll hit your FRA in 2021, you'll only lose $1 for every $3 you earn over $50,520 if you hit this amount before your birthday.

That money isn't gone forever. The Social Security Administration recalculates your benefit at your FRA to include the amount it withheld, so your future checks will be slightly larger. But you may be able to get larger checks still if you just delay benefits until you're ready to retire.

Married couples can either claim Social Security benefits on their own work record or on their spouse's. A spousal benefit is up to 50% of the worker's benefit at their FRA. But if the worker starts benefits early, it reduces their spouse's benefit as well.

Coordinating with your spouse is crucial to maximizing your household benefits. Use your Social Security accounts to estimate how much each of you can expect from the program. Then, look at a few different starting ages to determine when it makes sense for each person to sign up. Keep in mind that you can't claim a spousal benefit until the worker signs up.

You can also qualify for benefits on your ex's work record without affecting their or their current spouse's benefits. But there are a few rules you need to be aware of. The marriage must have lasted at least 10 years. And if the worker isn't already claiming benefits, you must have been divorced for at least two years before you can sign up. If you remarry, you'll lose these benefits.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Though rare, other household members, like dependent or disabled children, may qualify for Social Security benefits on your work record. You may also be able to claim survivors benefits for yourself and your children if you're caring for a deceased worker's child. In the latter case, you don't even need to be 62 or older to sign up.

Explore all of the benefits available to you and make sure everyone in your household that qualifies is receiving benefits. The Social Security Benefit Eligibility Screening Tool can help you quickly figure out which benefits you qualify for.

The federal government could take back some of your Social Security benefits if your provisional income -- adjusted gross income (AGI) plus nontaxable interest and half your Social Security benefits -- exceeds $25,000 for an individual or $32,000 for a married couple. Some states tax Social Security benefits as well. Here's a guide to Social Security benefit taxes if you're interested in learning more.

It's not always possible to avoid Social Security benefit taxes completely, but you may be able to reduce how much you owe by staying mindful of your taxable income. Reducing your spending or relying more upon Roth savings could help you hold onto more of your benefits.

ALSO READ: The Best Reason to Take Social Security Long Before Age 70

For most people, Social Security is never going to cover all of their retirement expenses. So it's important to have a lot of personal savings, too. It's easier to save as much as you need if you start early and make regular contributions. A 401(k) or an IRA is a great place to begin. You may even get an employer match if you contribute to a 401(k).

Use your current expenses and estimated life expectancy to get a rough idea of what your retirement might cost. Don't forget about inflation. Then, subtract your estimated lifetime Social Security benefit from this total to figure out how much you need to save on your own.

The government creates the rules for Social Security, but you still have a lot of say in how big your checks are. Avoiding the mistakes listed here is key to getting the most out of the program.

If any of the above mistakes surprised you, review your plans for Social Security and see if you can make any changes to help hold onto more of your hard-earned benefits.

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