Avoid These 6 Social Security Claiming Errors

Couple reviewing a social security statement listing benefits available.

Jim McGuire/Getty Images

You could miss out on thousands of dollars in Social Security Administration(SSA) benefits by making one of the several common mistakes people make when claiming them. Mistakes include claiming your benefits too early and not understanding and claiming benefits that are available to you.

Claiming Too Early

You may claim SSA payments before you reach your full retirement age. This age varies by your year of birth, which may be why many people are confused about when they should start getting payments. The youngest you may claim these benefits is at age 62, but full retirement age changes based on the year you were born. For Instance:

  • For those born in 1940, the age 65½ years.
  • People born in 1950 have full retirement at age 66.
  • Retirement for people born in 1955 is 66 years and two months.
  • People born in 1960 or later see full retirement at age 67.

The full retirement age can change if the U.S Congress mandates that change.

For every month that you claim payments before your full retirement age, your full payment will be reduced. For instance, a person who would receive payments of $1,000 at full retirement and claims 50 months early could see that $1,000 payment reduced to $741. This amounts to around a 26% cut in payments.

Not Knowing About the Earnings Limit

You can still work at the same time you receive SSA payments, but you must not earn above the yearly earnings limit. If you earn in excess of the limit (which is adjusted upward along with inflation each year), then your payments will be reduced. The earnings limit is also based on your retirement claim age.

As of 2021, the earnings limit for people under the full age was $18,960. The SSA will reduce your total benefit by $1 for every $2 you earn above the limit amount in a year. For full age claimants, the limit goes up to $50,520, and the SSA will only deduct $1 for every $3 over the limit.

People who think they can have a full-time job and collect their payments are often caught off guard when the SSA office tells them they made too much money and they have to repay some of the money. Once you reach full retirement age, you can earn as much as you’d like with no cut in payments.

Thinking You Can Stop and Start Your Benefits

It is not easy to turn off your SSA benefits. If you change your mind about claiming them within 12 months of first filing, you can repay all of the money you have received, and your account will reset as if you had never claimed.

However, you cannot simply stop your payments and then choose to start again later. Avoid this issue with careful and early planning. Work with a financial planner to decide when you can stop working and when your SSA payments will start. Once they start, see this as a permanent income stream.

Being Unaware of Spousal Benefits

As part of a married couple, if you coordinate claiming your benefits with your spouse, you can often receive more than if you each just receive payments based on your own situations. Most people look at when they should start their own benefits, but they don’t realize that they should look at the big picture.

Depending on the difference in age and payment amounts between you and your spouse, if one of you was born January 1, 1954, or earlier, you might be able to claim a spousal benefit while your partner allows their payment to keep growing or the other way around. Married couples miss out on thousands by not thinking about spousal payments. 

Not Knowing Your Potential Survivor Benefits

The higher payment amount that a couple receives is the amount that will continue for a surviving spouse. This means it is vital to maximize the benefit of the highest earner, as it can provide a powerful form of life insurance in the form of inflation-adjusted income for as long as a surviving spouse needs it. Don’t claim early without thinking about the impact this may have on your spouse.

Not Paying Taxes on Your Benefits

Yes, your SSA payments will be taxed. There is a formula in the tax code that describes how much of your benefits will be taxed. Between 0% and 85% of the payments you receive could be counted as taxable income. When you decide which account to draw retirement income from and in which order, you should make sure to time your SSA payments to reduce the amount of taxes you pay over your retirement years. Even so, some people fail to do this kind of withdrawal planning, so they pay more tax than they should have to.

Fearing That You Will Run out of Money

In survey after survey, people getting ready to retire and retirees state their number one fear is running out of money when they stop working A smart SSA benefit claiming plan can help protect against this outcome.

You can use a Social Security calculator to help you avoid costly mistakes. While calculators are great to work with and plug numbers into, deciding when and how to take retirement withdrawals in a tax-efficient manner takes some expertise. You may want to find a good retirement planner before you claim SSA.

Start your planning well before you stop working. If you're in the earlier years of your career, work with a financial planner decades before you reach the age you want to retire. If you're not, that's OK. Find a fee-only planner to put together a plan that starts today.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Social Security Administration. "Normal Retirement Age."

  2. Social Security Administration. "How Much Can I Earn and Still Get Benefits?"

  3. Social Security Administration. "Withdrawing Your Social Security Retirement Application."

  4. Social Security Administration. "Benefits for Your Spouse."

  5. Social Security Administration. "Income Taxes and Your Social Security Benefit."

Related Articles