Social Security is the largest source of income for millions of retiring Americans. Even though the system is nearly 90 years old, there is still a widespread misapprehension about it. Too many Americans are making costly mistakes that could result in losing tens of thousands of dollars in benefits over their lifetime.
A recent 2024 survey by Nationwide Financial found that nearly half of Social Security beneficiaries don’t know how to maximise their benefits. One-third are unsure of the right age to begin collecting them. That confusion can lead to poor decisions and lasting consequences. If you’re planning for retirement, here are the biggest Social Security mistakes to avoid—before it’s too late.
Mistake 1: Misunderstanding your full retirement age (FRA)
Your Full Retirement Age, or FRA, is the age at which you can begin receiving your full Social Security benefits. It is not the same for all people—it varies with the birth year.
If you were born between 1943 and 1954, your FRA is 66. If you were born after 1954, your FRA increases gradually to age 67 for those born in 1960 or later.
Most people wrongly believe that they’re entitled to full benefits at the time they are 62 years old. Yes, you can retire at age 62, but you’ll shortchange lifetime payments if you do. Alternatively, if you wait beyond your FRA—until age 70—you’ll gain a higher monthly benefit. In fact, for every extra year you wait, your benefit increases by about 8%.
Even the date you were born affects this. If you were born on the first of the month, the Social Security Administration holds your birthday as having taken place last month. That could alter your FRA and your benefit amount. Knowing precisely what your FRA is is a crucial first step to wise taking of Social Security.
Mistake 2: Filing too soon
Signing up for Social Security early at age 62 is one of the most popular rookie mistakes retirees commit. Although it may be tempting to receive money sooner, taking benefits early can cut your monthly benefit down by up to 30%, based on your birth year.
This lower payment isn’t temporary—it’s yours for life. Once you start receiving benefits early, your monthly payment will not increase to the full amount at your Full Retirement Age (FRA). It remains lower forever.
For example, if you retire at 62 and your total retirement benefit is 67, you will receive only 70% of that amount. That lower monthly payment will stick with you throughout retirement, costing you thousands of dollars in the long run.
Yes, naturally, there are circumstances in which premature benefit-taking would be appropriate—like illness or dire financial need—but far too many individuals do not take into account the long-term impact of premature benefit-taking in the absence of compelling provocation.
Error 3: Not considering life expectancy
When to take Social Security is partially a matter of how long you are expected to live. No one can be certain, but your diet, family medical history, and overall health can give you clues.
The more you live, the better off it is to wait until you start receiving benefits. If you live into your 80s or 90s, postponing until your FRA—or even 70—can result in your having a considerably higher lifetime total payout.
Sure, if you do have significant health problems or a lower life expectancy, it may be wiser to apply earlier. However, for most people, particularly those who have other sources of retirement income such as a pension or 401(k), postponing benefits can significantly contribute to establishing long-term financial security.
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Mistake 4: Not knowing how Social Security actually works
Another huge error is simply not having the basics down. Few people have any idea how Social Security calculates benefits, how your past earnings history affects payments, or what happens if you keep working and collect benefits.
Your benefit payment is based on the Social Security Administration’s 35 highest-paid years. If you haven’t worked for 35 years, the missing years are replaced with zeros, which lowers your average.
Others think they can claim early and then switch to a maximum benefit. No chance. The rate that you are paid is fixed when you claim. But if you’re not sure within 12 months of making your claim, you can withdraw your claim—the snag is you’ll have to repay everything you’ve been paid.”
If you keep working after early retirement, your benefits will be reduced temporarily if you make more than a certain amount of money. The good news is that the reductions are temporary, and you’ll have your benefit level recalculated after you reach full retirement age so that they can credit you the amounts withheld.
Error 5: Forgetting delayed retirement benefits
If you delay collecting your Social Security until your Full Retirement Age (FRA), your benefit will increase each month until you reach 70 years old. This increase, about 8% more annually, can become extremely significant to your bottom line.
Delaying benefits will be particularly appropriate for those who do not need the money right away or who will have a very long life. Waiting until 70 might not be an option for many people, but the payoff in terms of more money each month is worth it. Don’t forget, there isn’t a payoff to waiting past age 70, so that’s your deadline for maximising your benefits.
Error 6: Not seeking assistance or using tools
People like to do everything for themselves with Social Security, but it’s a very intricate system with many variables. That’s where encountering an online calculator or meeting with a financial planner helps.
More than 60% of employees with a financial planner get advice on when and how to claim Social Security, the Nationwide survey says. If you have dependents, are married, or plan to work, that advice alone can save you a significant amount of money.
Mistake 7: You’ll find it’s gone when you need it
Most Americans fear that Social Security will run out of money when they retire. Social Security is indeed experiencing financial problems, but it is not going broke.
Most analysts think that even if the adjustments are made to maintain the program with full funding, future retirees will not be denied benefits—albeit perhaps in smaller amounts. A whopping 73% of Americans polled reported that they are concerned about the system running out of money in their lifetime. Women are particularly concerned about the system, with 75% expressing worry compared to 69% of men.
Younger generations—Gen Z, Millennials, and Gen X—are more likely to assume they will receive nothing. It’s fine to save for yourself, but it’s as bad as not panicking or trusting that Social Security will be there when you need it.
Be in control of your retirement
Social Security is among the few guaranteed, inflation-protected sources of retirement income you can count on. And that’s why it’s so crucial to get it right.
By understanding your full retirement age, considering your health and life expectancy, waiting when you can, and not taking benefits before full retirement age without a plan, you will be making better choices that enhance long-term financial security.
Don’t leave money on the table. Play by the rules, ask questions, use tools, and seek help when you need it. With knowledge and planning, you can avoid these dumb mistakes—and retire with confidence.
