3 Social Security Mistakes That Could Cost You Big Time

Social Security benefits can potentially make or break your retirement, and millions of older adults rely on their monthly checks for a significant portion of income.

It’s wise, then, to ensure you have a solid understanding of how the program works. While Social Security can be complex and confusing, even small mistakes or misunderstandings can potentially cost you hundreds of dollars per month.

Here are a few of the most common mistakes to avoid.

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1. Not knowing your full retirement age

Your full retirement age (FRA) is the age at which you’ll receive the full benefit amount you’re entitled to based on your career earnings. If you file for Social Security before you reach your FRA, your benefit amount will be permanently reduced. By delaying benefits past your FRA, you’ll receive larger checks each month.

Those born in 1960 or later have an FRA of 67 years old, while those born before 1960 have an FRA of either 66 or 66 and a few months, depending on the exact birth year.

Only 13% of U.S. adults can correctly name their FRA, according to a 2022 survey from the Nationwide Retirement Institute. Also, the average guess among baby boomers was 63 years old, which is well below the actual FRA.

When you’re unsure of your FRA, it will be harder to know how your age will affect the size of your checks. For example, you might begin claiming at age 63 expecting to receive your full benefit amount. However, you’re actually claiming at least three years early, which will result in reduced payments.

2. Not checking your estimated benefit amount

Even if you still have years before you plan to retire, you can (and should) check your estimated benefit amount.

You can do this by checking your statements online through your mySocialSecurity account. From there, you can see an estimate of your future benefit amount based on your real earnings.

Keep in mind that if you still have many years left in your career, your benefits could change by the time you retire. Also, this estimate assumes you’ll file for Social Security at your FRA. If you begin claiming before or after that age, it will affect your monthly payments.

When you know approximately how much you can expect from Social Security, it will be easier to determine how much you’ll need to save on your own. And the sooner you check your estimated benefit amount, the more time you’ll have to adjust your retirement savings accordingly.

3. Not taking advantage of all the benefits you’re entitled to

In general, once you’ve worked and paid Social Security taxes for at least 10 years, you become eligible for retirement benefits. But there are a few other types of Social Security benefits you could qualify for:

Spousal benefits: You can qualify for spousal benefits if you’re at least 62 years old and are married to someone who is entitled to Social Security retirement or disability benefits. The maximum you can receive is 50% of the amount your spouse is eligible for at his or her FRA.
Divorce benefits: To qualify for divorce benefits, you must be at least 62 years old, not currently married, and your previous marriage must have lasted for at least 10 years. Similar to spousal benefits, the most you can collect is 50% of the amount your ex-spouse will receive at his or her FRA.
Survivors benefits: If you were financially dependent on a loved one who passed away, you could qualify for survivors benefits. These benefits are generally reserved for widows and widowers, but they’re sometimes available to ex-spouses, parents, children, and other family members, too.

If you qualify for any of these types of benefits, you could potentially receive hundreds of dollars more per month. Make sure you’re taking full advantage of them.

Social Security can be confusing at times, but it pays to have at least a basic understanding of how the program works. By avoiding these common mistakes, you can maximize your monthly payments and enjoy a more financially secure retirement.

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