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7 Mistakes That Can Mess Up Your Social Security Benefits

AInvestSunday, Jan 5, 2025 12:19 pm ET
2min read


As we approach retirement, many of us look forward to receiving Social Security benefits as a crucial part of our financial plan. However, there are several common mistakes that can significantly impact your benefits and potentially leave you with less income than you expected. In this article, we'll explore seven mistakes to avoid when planning for your Social Security benefits.



1. Claiming benefits too early
- Many people claim their Social Security benefits as soon as they turn 62, but this can be a costly mistake. For every $2 you earn over the annual limit ($17,640 in 2019) while working and collecting benefits before your full retirement age, $1 in benefits will be temporarily withheld. This can result in a lower overall benefit and less income in retirement.
- Consider waiting until your full retirement age (FRA) or even delaying until age 70 to maximize your benefits.

2. Not utilizing the restricted application strategy
- For couples with at least one spouse born before Jan. 2, 1954, the restricted application strategy allows one spouse to claim a spousal benefit while deferring their own benefit. By doing so, they can potentially collect additional spousal benefits while their own benefit grows to its maximum amount at age 70.
- Not utilizing this strategy can result in a lower overall retirement income for the couple.

3. Remarrying without understanding the consequences
- If you're currently collecting an ex-spousal Social Security benefit and remarry, that benefit will cease. Additionally, if your ex-spouse passes away, you may step up to their full benefit amount.
- Be aware of the potential impact of remarriage on your Social Security benefits and plan accordingly.

4. Waiting on a spousal benefit until 70
- Spousal benefits do not receive deferral credits, unlike primary worker benefits. Therefore, there is less incentive to wait to collect spousal benefits.
- Consider claiming spousal benefits as soon as you're eligible to maximize your overall retirement income.

5. Thinking if you were to die at 70, you would have been better off collecting early
- Even if you die at age 70, your spouse could still be better off with the decision to delay claiming benefits. They would receive the higher benefit for the rest of their life.
- Consider the potential long-term benefits for your surviving spouse when deciding when to claim Social Security benefits.

6. Neglecting to plan in case of death of spouse
- Not planning for the potential death of a spouse can lead to a loss of income and potential financial hardship for the surviving spouse.
- Consider the impact of Social Security benefits on the surviving spouse's overall retirement income and longevity when planning for retirement.

7. Not asking for help
- Social Security is a complex system with many rules and options. It's easy to make mistakes or overlook important considerations.
- Consult with a trusted money management practitioner or financial advisor to help navigate the complexities of Social Security and maximize your benefits.

By avoiding these common mistakes, you can help ensure that you're making the most of your Social Security benefits and setting yourself up for a secure and comfortable retirement. Don't let these pitfalls derail your financial plans – stay informed and make smart decisions about your benefits.
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