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9 Social Security Mistakes to Watch Out For

By Matthew Frankel, CFP® - Sep 6, 2018 at 7:56AM
Older couple looking over paperwork with laptop in front of them.

9 Social Security Mistakes to Watch Out For

Isn’t Social Security straightforward?

The general idea behind Social Security benefits is an easy one -- after working for a few decades, fill out an application and get a monthly benefit check for the rest of your life.

However, there’s a surprising amount of strategy that can be implemented in order to maximize your Social Security benefits, and there’s also several Social Security mistakes that could cost you thousands of dollars in benefits over the course of your retirement.

Having said that, here are nine potential Social Security mistakes you should keep in mind.

ALSO READ: Make Your Social Security Check Bigger With These 3 Simple Tips



Closeup of a clock face.

Claiming your benefit too early

If you claim Social Security before you reach full retirement age, you should be almost certain it’s the right move for you.

The reason? It can be difficult, if not impossible to get a do-over if you change your mind later.

Specifically, you are allowed to withdraw your Social Security application and re-claim benefits at a later date, but two conditions apply. First, you can only withdraw your application within the first 12 months of receiving benefits. And second, in order to do so, you’ll have to pay back every penny of benefits you’ve already received. This can be quite a bit of money to come up with.

To be sure, there are some perfectly valid reasons for claiming Social Security before your full retirement age, but it’s important to carefully weigh the pros and cons of doing so before you apply for benefits.



Man with hands on his head in frustration looking at paperwork.

Not checking your Social Security earnings record

Do you read your Social Security statement each year? If not, it’s a smart idea to create an account at (if you haven’t done so already) and check it out.

For one thing, your Social Security statement contains lots of valuable information, including your estimated retirement benefits, disability benefit eligibility, benefits for your potential survivors, and information about your Medicare eligibility.

Perhaps the most important reason to check your Social Security statement is to make sure your earnings record is accurate, as this is the information your future benefits will be based on. Missing earnings could cost you thousands of dollars over the course of your retirement.

If you think the SSA doesn’t get this wrong often, think again. In one recent year, the SSA said that there was about $71 billion in Social Security-taxed wages that couldn’t be matched to any earnings records, and only about half of this was eventually fixed. So, there are literally tens of billions of dollars in unmatched earnings, and it’s important to make sure that none of it is yours.



Older couple together smiling on a couch.

Delaying a spousal benefit

It’s well-known that delaying your Social Security retirement benefit results in a permanently-higher monthly income. For example, if your full retirement age is 66, waiting until 70 to claim your benefits will make your monthly checks 32% higher -- a big difference.

However, there is no such provision for Social Security spousal benefits. In other words, if your spouse is entitled to a benefit based on your work record, there’s no reason for them to wait until after full retirement age to claim it.

Furthermore, since the rules state that a spousal benefit cannot be claimed until the primary earner claims their own benefit, it rarely makes sense to delay your own retirement benefit past your spouse’s retirement age if a spousal benefit is expected, even though your benefit would increase. 

ALSO READ: The 3 Most Surprising Social Security Benefits You Can Get



Social Security cards and money.

Assuming Social Security is all the retirement income you need

Experts generally suggest that you’ll need 70% to 80% of your pre-retirement income to maintain your quality of life after retiring.

However, it’s important to realize that Social Security is only designed to cover about half of that. The average American can expect to replace about 40% of their income with Social Security. The rest will need to come from other sources, such as pensions and retirement savings.

Far too many Americans make the mistake of assuming Social Security will be all the income they need in retirement. In fact, 23% of married couples age 65 and older and 43% of unmarried seniors rely on Social Security for 90% or more of their income. 

The takeaway: If you’re planning on Social Security being your primary income source in retirement, it’s a good time to re-think your strategy and boost your retirement savings. 



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Retiring before working for 35 years

The Social Security formula takes your 35 highest-earning years into account. All of your annual Social Security-taxed earnings are indexed for inflation, and the 35 highest years are averaged to calculate your average indexed monthly earnings, or AIME. This is the number that plugs into the Social Security formula to determine your benefit.

If you have fewer than 35 years of Social Security-covered employment, zeros are used in the calculation, and this can significantly lower your AIME (and your benefit).

Consider this simplified example. If you earn an inflation-adjusted average of $50,000 throughout your career, this translates to a monthly average of $4,167. However, if you only have 30 years of employment, five zeros will be used in the calculation, which would bring your monthly average down to $3,571.

Based on the 2018 Social Security benefit formula, this translates to a primary insurance amount (PIA), or base benefit, of $190.72 less per month. Over the course of a 20-year retirement, this is nearly $46,000 less than you’d receive had you worked for 35 years.

Here’s the point. If you’re considering early retirement, check to see how many years of employment you’ve had. If it’s less than 35, if could be a good reason to wait.



Two people reviewing paperwork with financial advisor.

Not making an appointment to claim benefits in person

By far, the easiest way to claim Social Security benefits is online. The application on can be completed in about 15 minutes and generally doesn’t require any further documentation.

Of course, some Americans aren’t comfortable doing this online and want personal guidance. For this reason, you can still apply for benefits over the phone or in person at your nearest Social Security office. However, if you choose the in-person option, be sure to call and make an appointment first. Since 2010, the number of office visitors who waited for longer than one hour has increased by 78%.



Stack of hundred dollar bills.

Misunderstanding the “earnings test”

If you’re still working and haven’t yet reached full retirement age, your benefits can be withheld based on your earnings. Specifically, here are the two “earnings test” rules for 2018:

  •       If you will reach full retirement age after 2018, $1 of your benefits will be withheld for every $2 you earn in excess of $17,040.
  •       If you will reach full retirement age during 2018, $1 of your benefits will be withheld for every $3 you earn in excess of $45,360. This is prorated monthly, and only the months before your birthday month are counted.

To be clear, benefits withheld under the earnings test aren’t necessarily lost. They can be returned in the form of increased benefits once you reach full retirement age.

However, if you’re still working, it can definitely be a mistake to claim Social Security and expect to receive your entire benefit each month.

ALSO READ: 5 Concrete Social Security Truths



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Ignoring survivors benefits

For married couples, Social Security survivors benefits can help protect the lower-earning spouse in the event the higher-earner dies. For example, if you get a benefit of $2,000 and your spouse gets $1,500, they’ll get bumped up to your benefit amount if you die first.

This is why it’s important to consider this when deciding when you should claim benefits. Specifically, if the higher-earner chooses to wait a few years to claim Social Security, not only will they get a higher monthly income, but the lower-earning spouse will be better protected.



Tax form 1040 on top of a pile of twenty dollar bills.

Thinking Social Security isn’t taxable

Did you know that you may need to pay income tax on your Social Security benefits? Depending on how much retirement income you have, as much as 85% of your benefits could be taxable. And you don’t exactly need to be “high income” to be in this category.

  •       If your combined income (your modified adjusted gross income, tax exempt interest, and half of your SS benefits) is greater than $25,000 for single filers or $32,000 for married couples filing jointly, as much as 50% of your benefits could be taxable.
  •       If your combined income is greater than $34,000 (single) or $44,000 (joint), as much of 85% of your benefits could be subject to federal income tax.

In a nutshell, if Social Security is your only significant source of retirement income, your benefits are unlikely to be taxable. On the other hand, if you get a pension, or have significant 401(k) income, just to name a couple examples, a portion of your Social Security benefits will be taxed. Keep this in mind when estimating how much income you’ll have to work with in retirement.

ALSO READ: How Safe Is Social Security?



Older person putting card into ATM.

Avoiding these mistakes could mean a more secure retirement

These are nine common mistakes people make, but they can be rather costly. It’s a good idea to take the time to learn about Social Security before you reach the age of eligibility, so that you can make the best possible decisions for your (and your family’s) financial future.

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